REG - Catalyst Media Group - Interim Results

Catalyst MediaAnnouncement

26/03/2020 07:00

RNS Number : 6322H
  
Catalyst Media Group PLC
  
26 March 2020
  
 

26 March 2020
 
Catalyst Media Group Plc
("CMG", "Catalyst" or the "Group")
 
Interim Results for Six Months Ended 31 December 2019
 
Catalyst Media Group Plc announces its interim results for the six months ended 31 December 2019.
 
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 2019
·        CMG profit after taxation and before adjustment to investment valuation of £0.32 million (2018: £0.42 million)
·        Earnings per share of 1.53p (2018: 1.98p)
·        Net asset value per share of 66.3p (2018: 70.2p)
·        In the six months to 30 September 2019, SIS achieved
-    Revenues of £121.1 million (2018: £120.7 million)
-    EBITDA of £1.9 million (2018: £8.5 million)
-    Profit after tax on ordinary activities of £1.7 million (2018: £2.1 million)
·        In October 2019, SIS declared a dividend of £5.0 million of which £1.03 million was received by CMG
·        CMG declared a dividend of £1.05 million in October 2019, paid in November 2019
 
Impact of Covid-19
Since 12 March 2020, horse racing fixtures began to be cancelled and there are now no horse racing or greyhound racing fixtures in the UK, or indeed in the majority of countries.  As a result, SIS has informed the Company that whilst trading is and will be impacted going forward, it still expects to make a profit for the year ending 31 March 2020, prior to any provisions or adjustment as a result of Covid-19, and at this point, no guidance can be provided for the following financial year pending the resumption of racing. In addition, SIS's cash resources will be impacted, though fortunately SIS currently has significant cash reserves amounting to approximately £58 million. The actions now being taken by SIS's management, including suspending operations, are intended to seek to ensure that as and when conditions improve and racing recommences, SIS will be well placed to continue to provide the range of services previously offered to the market.
 
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 2019, the Company has generated a net profit after taxation before adjustment to investment valuation of £0.32 million (2018: £0.42 million).
 
Net assets as at 31 December 2019 were £13.9 million (30 June 2019: £14.8 million). Net cash as at 31 December 2019 was £0.3 million (2018: £0.4 million). 
 
CMG's main asset remains its 20.54% stake in SIS and, in October 2019, the Company received a dividend of £1.03 million from SIS. Following the payment of a dividend of £1.05 million to shareholders in November 2019, the value of CMG's investment in SIS has been reduced from £14.3 million to £13.6 million. As a result, the net assets per share as at 31 December 2019 were 66.3p (2018: 70.2p), though the carrying cost of our investment in SIS will need to be reviewed again at the year end in light of the present difficulties.
 
CMG equity accounts for its share in the profits of SIS which were £1.7 million after tax for the six month period to 30 September 2019 (2018: £2.1 million). SIS revenues for the period were £121.1 million (2018: £120.7 million) which was derived from the business of providing integrated television and data services to Licensed Betting Offices in the UK, Ireland and overseas. Operating profits of SIS for the period decreased to £1.9 million, compared to £2.5 million in the comparable period for 2018.
 
On receipt of its share of the SIS dividend, being £1.03 million, the Company had a cash balance of approximately £1.37 million and as announced on 31 October 2019, the Board of CMG approved the distribution of £1.05 million to CMG's shareholders by way of a dividend of 5p per share. The dividend was paid on 22 November 2019 to CMG shareholders on the register of members as at 8 November 2019.
 
CMG currently has cash of approximately £0.3 million which is sufficient for its present needs.
 
Set out below is an overview of SIS's key divisions for the period under review.
 
SIS Betting - UK and Ireland Retail 
SIS continued to provide a core service based on content from Racecourse Media Group horseracing, SIS British Greyhound Service, Irish Horseracing, Chelmsford City Horseracing, 49s and International Horseracing on mid and long term agreements to over 97% 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 Mexican greyhounds as well as the prestigious Saudi Cup, the most valuable horse race this year.
 
SIS Betting - International & Online 
SIS produces 24/7 channels covering horseracing, greyhound racing, virtual racing and mixed channels, having secured content covering the whole 24-hour period - content includes horseracing from Melbourne Racing Club and Thoroughbred Racing South Australia, Palermo in Argentina, Latin America, South Korea, Philly PARX and Spain  as well the UK and Irish horseracing and greyhound racing from UK, Ireland and Mexico.
 
SIS has over 30 channels designed to maximise betting opportunities for international retail and online operators and has signed a number of international and online operators to multiyear agreements.  SIS continues to progress its strategy to increase distribution, in both new and existing International and Digital markets, using proprietary production technology as well as streaming and data pricing services. 
 
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. 
 
Litigation
Further to the Company's announcement in January 2020, in respect of the case brought by The Racing Partnership Limited and others (together the "Claimants") against SIS's subsidiary, Sports Information Services Limited ("SISL"), and others, SIS has informed the Company that the Claimants have filed at the High Court particulars of the damages sought. The Claimants are seeking damages in excess of £40 million.
 
SISL has reviewed the particulars of the damages sought with its legal advisers and is currently preparing a robust defence, in tandem with the ongoing appeal.  SISL's management continue to firmly believe that in the event that damages are awarded to the Claimants, any final award of damages would be considerably less than the amount claimed.
 
SISL have advised the Company that the Court of Appeal have set a date for the appeal hearing of 7-9 July with judgement expected to be handed down towards the end of the year. 
 
SISL continues to hold a high level of cash of approximately £58 million and should a final award of damages be made at the level the Claimants seek, the likelihood of which SISL management considers remote, there is sufficient cash available to meet such award.
 
Current Trading and Impact of Covid-19
The current year has seen the implementation of the Triennial Review from 2018 announced by the Department for Digital, Culture, Media and Sport which introduced a stake reduction in Fixed Odds Betting Terminals ("FOBT") maximum stakes from £100 to £2. Since the stake reduction came into force in April 2019, SIS has seen a fall in the number of UK Licensed Betting Office subscribers from approximately 9,250 to approximately 7,950, which is slightly lower than SIS's management expected. However, until the recent Covid-19 outbreak SIS's performance was ahead of SIS management's expectations and the investment and progress in Digital and International markets had continued. Announcements in the last 12 months by SIS have included the launch of a World Greyhound Tote (aimed at tote based territories around the world), Competitive Gaming (E-sports product) expansion into Eastern Europe and South America both with new retail and online operators and a number of new retail and online customers in Europe for its Watch and Bet 24/7 channels. 
 
Since 12 March 2020, horse racing fixtures began to be cancelled and there are now no horse racing or greyhound racing fixtures in the UK, or indeed in the majority of countries.  As a result, SIS has informed the Company that whilst trading is and will be impacted going forward, it still expects to make a profit for the year ending 31 March 2020, prior to any provisions or adjustment as a result of Covid-19, and at this point, no guidance can be provided for the following financial year pending the resumption of racing. In addition, SIS's cash resources will be impacted, though fortunately SIS currently has significant cash reserves amounting to approximately £58 million. The actions now being taken by SIS's management, including suspending operations, are intended to seek to ensure that as and when conditions improve and racing recommences, SIS will be well placed to continue to provide the range of services previously offered to the market.
 
SIS's focus at this time is on the wellbeing of its staff and has confirmed that it is operating in compliance with the UK Government's latest guidance. SIS has implemented its business continuity plans throughout March to manage the frequently changing circumstances and has reached the position today where it believes that the actions it is taking are in the company's, employees', shareholders' and stakeholders' best interests.  SIS will be working in the interim to ensure that it is prepared for the relaxing of restrictions around sporting events and social distancing and the resumption of racing.
 




 
Consolidated interim statement of comprehensive income
 







Notes


6 months to 31 December 2019
 
£
Unaudited


6 months to 31 December 2018
 
£
Unaudited


12 months to 30 June 2019
 
£
Audited


























Revenue






12,500


12,500


25,000


























Cost of sales






-


-


-




Gross profit






12,500


12,500


25,000


























Administrative expenses






(51,279)


(49,574)


(119,411)




Other operating income






-


-


-




Operating loss






(38,779)


(37,074)


(94,411)


























Financial income






464


4,912


5,312




Financial costs






-


-


-




Net financial income






464


4,912


5,312




 




















Share of profit of equity-accounted associate
Impairment of equity-accounted associate


3


359,245
                     -


440,172
                     -


3,753,685
(4,270,701)


























Profit before taxation






320,930


408,010


(606,115)


























Taxation






-


9,020


16,623


























Profit/(loss) for the period 






320,930


417,030


(589,492)


























Share of other comprehensive profit of associate
 






-


-


915,673




Total comprehensive income/(loss) for the period






320,930


417,030


326,181


























Attributable to equity holders of the company






320,930


417,030


326,181


























Earnings/(loss) per share:


4
















Basic






1.53p


1.98p


(2.80p)




Diluted 






1.53p


1.98p


(2.80p)



 




 
Consolidated interim statement of financial position
 







Notes


31 December 2019
 
£
Unaudited


31 December 2018
 
£
Unaudited


30 June
2019
 
£
Audited




Assets




















Non-current assets




















Investment in associate


3


13,607,067


14,316,221


14,274,706












13,607,067


14,316,221


14,274,706


























Current assets




















Trade and other receivables






18,795


10,422


39,007




Cash and cash equivalents






326,182


449,583


383,612












344,977


460,005


422,619


























Total assets






13,952,044


14,776,226


14,697,325


























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 






8,719,977


9,541,519


9,450,670












13,936,970


14,758,512


14,667,663


























Current liabilities




















Trade and other payables






15,074


19,403


29,662




Corporation tax payable






-


(1,689)


-












15,074


17,714


29,662


























Total equity and liabilities






13,952,044


14,776,226


14,697,325



 




 
Consolidated interim cash flow statement
 











6 months
to 31 December 2019
 
£
Unaudited


6 months
to 31 December 2018
 
£
Unaudited


12 months
to 30
June
2019
 
£
Audited




















 




Cash flow from operating activities




















Profit / (loss) before taxation






320,930


408,010


(606,115)




Adjustments for:




















Share of profit from associate






(359,245)


(440,172)


(3,753,685)




Impairment of associate






-


-


4,270,701




Finance income






(464)


(4,912)


(5,312)




Corporation taxes recovered






-


4,365


4,365


























Net cash outflow from operating activities before changes in working capital 






(38,779)


(32,709)


(90,046)




Decrease in trade and other receivables






20,212


20,524


1,229




Decrease in trade and other payables 






(14,588)


(10,840)


(579)


























Net cash outflow used in operating activities 






(33,155)


(23,025)


(89,396)


























Investing activities




















Dividend received 






1,026,884


8,214,659


8,214,659




Interest received






464


4,912


5,312


























Net cash inflow from investing activities






1,027,348


8,219,571


8,219,971


























Financing activities




















Dividends paid
 






(1,051,623)
 


(12,198,598)


(12,198,598)




Net cash outflow from financing activities






(1,051,623)


(12,198,598)


(12,198,598)


























Net movement in cash and cash equivalents in the period






(57,430)


(4,002,052)


(4,068,023)




Cash and cash equivalents at the beginning of the period






383,612


4,451,635


4,451,635


























Cash and cash equivalents at the end of the period






326,182


449,583


383,612



 




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 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






























Loss for the 6 month period to 30 June 2019


-


-


-


(1,006,522)


(1,006,522)




Share of other comprehensive profit of associate


-


-


-


915,673


915,673




Total comprehensive profit for the period


-


-


-


(90,849)


(90,849)






























At 30 June 2019


2,103,202


711,117


2,402,674


9,450,670


14,667,663



 







Share
 capital
 
£
Unaudited


Capital redemption reserve
£
Unaudited


Merger
 reserve
 
£
Unaudited


Retained surplus/ (deficit)
 
£
Unaudited


Total shareholders equity
 £
Unaudited






























At 1 July 2019


2,103,202


711,117


2,402,674


9,450,670


14,667,663






























Profit for the 6 month period to 31 December 2019


-


-


-


320,930


320,930




Dividend paid to company shareholders


-


-


-


(1,051,623)


(1,051,623)




Total comprehensive loss for the period


-


-


-


(730,693)


(730,693)






























At 31 December 2019


2,103,202


711,117


2,402,674


8,719,977


13,936,970



 
                                                                        




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 2019 to 31 December 2019 including the financial results of Sports Information Services (Holdings) Limited ("SIS") for the six month period to 30 September 2019.
 
These consolidated interim financial statements of the Company and its subsidiaries (the "Group") for the six months ended 31 December 2019 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 2019 and will remain so for the year ending 30 June 2020.
 
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 2019, 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 2020. There has been no material impact on the Group's financial statements
§  IFRS 16: Leases
 
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 17: Insurance Contracts (effective as of 1 January 2021)
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 2019


14,274,706




Additions - share of profit


359,245




Dividend received


(1,026,884)














At 31 December 2019


13,607,067



 
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 2019 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 £13,607,067.
 



Share of profit of associate*


30 September
2019






31 December 2019


31 December 2018


30 June
2019








SIS Total






CMG share


CMG share


CMG share








£'000






£'000


£'000


£'000




Revenue:
























SIS Betting Services


121,062






24,866


22,391


47,263




SIS LIVE services














2,394


2,321






























Total revenue


121,062






24,866


24,785


49,584






























Operating profit from ongoing operations


1,911






393


527


1,517




Net interest receivable / (payable)


261






54


26


126




(Losses) / profits on business wind down


-






-


-


2,606




Profit on disposal of fixed asset


-






-


-


-






























Profit before tax


2,172






446


543


4,249




Taxation


(423)






(87)


(103)


(496)




Share of profit after taxation


1,749






359


440


3,753




Net income from associate


1,749






359


440


3,753






























Other comprehensive income
























Actuarial (loss) /gain


-






-


-


1,443




Deferred tax


-






-


-


(500)




Change in value of hedging instrument


















(27)








-






-


-


916






























Share of gross assets and liabilities of associate
























Gross assets


111,971






22,999


28,786


24,550




Gross liabilities


(46,392)






(9,529)


(11,687)


(11,438)




Net equity


65,579






13,470


17,099


13,112



 
*The period covered by the associate's accounts is the six months to 30 September 2019. The revenues have been stated excluding internal revenues.
 
As at 31 December 2019, SIS continued to be involved in a litigation case brought by The Racing Partnership ("TRP") and others against SIS's subsidiary, Sports Information Services Limited ("SISL"), and others. SISL has successfully defended two of the three claims. Following the period end, SIS has informed the Company that the Claimants have now filed at the High Court particulars of the damages sought, being in excess of £40 million.
 




 
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 2019
£


6 months to
31 December 2018
£


12 months to 30 June
2019
£




Basic and Diluted










 




Profits per share - pence


1.53p


1.98p


(2.80p)








































Profit attributable to equity shareholders


320,930


417,030


(589,492)






















Weighted average number of Shares in issue


21,032,030


21,032,030


21,032,030



 


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