Final Results for the year ended 30th June 2016

RNS Number : 6321R

Catalyst Media Group PLC

13 December 2016

 

Catalyst Media Group plc

("CMG" or the "Company")

Final Results for the year ended 30th June 2016

The Board of Catalyst Media Group is pleased to announce the final results for the Company for the year ended 30 June 2016. CMG is a 20.54% shareholder of Satellite Information Services (Holdings) Ltd ("SIS") and the results for the year to 30 June 2016 incorporate its share of the profits of SIS for its year ended 31 March 2016.

Financial overview

·      CMG loss before taxation £0.06 million (2015: £1.5 million profit)

·      Loss per share 0.18p per share (2015: 5.82p (restated) earning per share)

   -     Earnings per share before impairment 12.17p per share (2015: 16.84p earning per share)

·      Net Asset value per share 98.1p (2015: 98.4p)

·      SIS Revenues for year ended 31 March 2016 £227.9 million (2015: £229.0 million)

·      SIS total operating profit: group and share of joint venture and associates £20.4 million  (2015: £25.9 million)

·      SIS profits after tax and exceptional items £16.6 million (2015: £21.4 million)

·      SIS net cash inflow from operating activities £48.0 million (2015: £37.8 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 £2,514,495

Enquiries:

Catalyst Media Group:
Michael Rosenberg Non-executive Chairman	[phone]
Melvin Lawson Non-executive Director	[phone]
Strand Hanson Limited:	[phone]
James Harris Richard Tulloch

Chairman's statement

I am pleased to present the results for Catalyst Media Group plc ("CMG" or the "Company") for the year ended 30 June 2016, 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 CMG's share in the profits of SIS for its year ended 31 March 2016 of £3.4 million (2015 - Restated: £4.4 million), CMG recorded a loss before taxation of £0.06 million, following an impairment charge of £3.0 million and a transitional adjustment of £0.4 million (2015 - Restated: profit of £1.5 million following a £2.8 million impairment charge). Net Assets at the year end were £24.9 million (98.1p per share) (2015 - Restated: £25.0 million (98.4p per share)).

The main asset of CMG continues to be the 20.54% shareholding in SIS. CMG equity accounts for its share in the profits of SIS. For the year ended 31 March 2016, SIS had revenues of £227.9 million (2015: £229.0 million) of which £209.3 million was derived from Betting Services (2015: £207.3 million) and £18.6 million from SIS LIVE Services (2015: £21.7 million). The total operating profit for SIS was £20.4 million (2015: £25.9 million). Profits after exceptional items and taxation were £16.6 million (2015: £21.4 million). The share attributable to CMG after tax was £3.4 million (2015: £4.4 million). SIS's Net Cash inflow for the period was £48.0 million (2015: £37.8 million) from operating activities. At the year end, SIS had a substantially increased cash position of £62.2m (2015: £21.9m) prior to the payment of the dividend referred to below. SIS's operating profit margin⁽¹⁾ decreased slightly to 8.9% compared to 11.1% (restated) for the previous year.

⁽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.

Review of CMG's investment in SIS

As reported in the Company's trading update announced on 14 October 2016, the profits were below the prior year due to a reduction in the subscriber base during the year, the impact of which was partially offset by an increase in charges to subscribers, combining with increased costs arising from media rights, additional content and inflationary factors.

In the light of the strong cash position of SIS, the progress it has made in signing new media rights and the continued positive cash flow generation from its operations SIS approved a dividend of £20.0 million in July 2016. CMG received its share of £4.1 million on 29 July 2016.

SIS Betting Retail

As previously reported various racing media rights acquired from Arena Racing and Northern Racing expire at the end of 2016 and 2017. However, following the agreement with Racecourse Media Group ("RMG") the main media and data rights relating to horse racing have now been extended from 2018 to 2023. Given the reduction in margins from 2018 when the new contracts come into effect, SIS has been pursuing growth initiatives to widen its product offering to enhance the profitability of the Company, in particular in the digital streaming sector and online gaming as detailed below under SIS BETTING DIGITAL.

Horse racing Ireland ("HRI") granted a five year extension to the end of 2023 in respect of the contract for distribution of data and live pictures to Licensed Betting Offices in the UK, Ireland and internationally. Also from 2017, SIS has the sole and exclusive right to stream Irish horse racing to online operators worldwide and to distribute direct to home pictures and will be working with At The Races, the current rights holder, to exploit these rights for an initial period.

SIS has signed up additional rights for greyhound tracks and is progressing to secure further rights in this area both on a UK and international basis.

SIS BETTING DIGITAL

The strategy to diversify into B2B supply in the digital sector is continuing with products launched around streaming, mobile games, pricing data and in play data. This has involved direct investments of approximately £8.0 million as at March 2016 and SIS continues to invest in developing current and new initiatives in this area.

SIS has recently been shortlisted for a main industry award for its digital product SIS Stream TV which can deliver content anywhere in the world and gives bookmakers the ability to customise what content is displayed to their customers on any platform.

A major new development is a SIS initiative to bring in-running betting on horseracing to its customers. This consists of a low cost transmitter, the size of a smart phone, which can be inserted into the saddle cloth and carried on the horse. It can relay the racing line and speed of the horse and can highlight where it is running at a different speed to the main pack. This provides real-time data feed of the position of every horse in a race which, when combined with continuously varying odds produced by SIS' automated pricing capability creates a new betting product for SIS customers. This is expected to be launched in 2017 and will provide additional new revenue opportunities for SIS, particularly in the online sector.

SIS LIVE

SIS LIVE continues to offer specialised broadcast solutions including HD, UHD, satellite uplinks, streaming, satellite internet and teleport together with fibre services. SIS LIVE continues to focus on transitioning from a solely satellite business to a mixed satellite and fibre business and now has 65 fibre connections across the UK and Ireland and expects this to increase to 100 by mid 2017.

SIS LIVE has signed an agreement with the media services arm of Babcock International Group to supply Direct To Home ("DTH") services using SIS's UK teleports for uplinking and satellite facilities provided by SIS for distribution of several television channels to households served by the SKY platform. SIS expects to provide further DTH services in the future.

The trend of news broadcasters to move away from Satellite News Gathering ("SNG") towards using IP technology and 4G mobile technology has continued and this has seen a decrease in demand from SIS LIVE customers for SNG trucks, with the fleet size expected to reduce to 18 trucks by 2017.

Following a review of the SIS LIVE business and in line with the move away from SNG, the decision has been made to exit the Satellite Hardware division, which has historically provided the satellite technology for the SNG trucks as well as selling technology to other businesses. The proposed sale of the business has brought interest from a number of parties and negotiations for the sale of this division are on-going.

SIS Results

The results of SIS for the year ended 31 March 2016 are as follows:

	31 March 2016	31 March 2015
	£'000	£'000
		Restated*
Revenue	227,930	229,035
Operating expenses	(207,534)	(203,612)
Operating profit before exceptional items	20,396	25,493
Exceptional items	-	(70)
Operating profit Share of operating profit/(loss) of joint venture: -     joint venture -     associate	20,396 (36) -	25,423 442 -
Total operating profit Profit / (Loss) on the managed wind down of business+ Profit on disposal of joint venture Profit on disposal of associate Profit on disposal of tangible assets	20,360 (490) 642 - 317	25,865 1,064 - 40 5
Net interest receivable / (payable)	458	(562)
Profit on ordinary activities before tax	21,287	26,412
Tax on profit on ordinary activities	(4,686)	(4,990)
Retained profit transferred to reserves	16,601	21,422

* The prior year figures within the financial statements of SIS have been restated following the transition to reporting under FRS 102.The restatement relates primarily to the reclassification between interest payable and remeasurements of net defined benefit obligation. The impact on the retained profit transferred to reserves was only an increase of £22,000.

⁺ Profit/(Loss) on the managed wind down of business relates to the closure of SIS's Outside Broadcast Division in 2014.

India

As reported the claim in respect of the Indian project continues to be pursued but the outcome remains uncertain.

Share buy back programme

CMG received the sum of £4.1 million in July 2016 being its share of the SIS dividend of £20.0 million. Given the strong cash position of SIS it is possible that further dividends may be received in the future but no decisions have been made by SIS with regard to this. As already reported CMG undertook a share buy back programme in accordance with the authority granted at the last AGM. A total of 400,000 shares have been purchased at a price of 70p per share and a total of 2,979,327 shares have been purchased at a price of 75p per share out of the total authorised to be purchased of 3,411,704. The shares so purchased have been cancelled and following that process the Company's issued share capital is now 21,032,030 shares.

It is the intention to propose a renewal of the authority for the Company to purchase further shares at the AGM referred to below.

Outlook

Current trading of SIS is in line with SIS's management's expectations for this year but from 2017 onwards profitability will begin to decline as the margins from betting activities reflect the new arrangements. Cash generation for SIS for 2017, excluding dividends, will remain ahead of EBIT due to amortised rights. CMG overheads continue at a very low level.

AGM

The next Annual General Meeting of the Company will be held on 13 January 2017at 10.00 a.m. Formal Notice of the meeting is set out at the end of the report and accounts together with the form of proxy.

Michael Rosenberg OBE

Chairman

Consolidated statement of comprehensive income for the year ended 30 June 2016

								Restated
						Year          ended		Year    ended
						30 June		30 June
						2016		2015
					£		£
	Revenue				25,000		25,000
	Cost of sales				-		-
	Gross profit				25,000		25,000
	Administrative expenses				(112,036)		(119,991)
	Operating loss				(87,036)		(94,991)
	Financial income				7		1,012
	Financial costs				(186)		160
	Net financial income				(179)		1,172
	Share of profit of equity-accounted associate, net of tax				3,409,845		4,400,080
	Impairment of equity-accounted associate				(3,014,622)		(2,832,788)
	Transitional adjustment relating to equity-accounted associate				(368,521)
	(Loss) / Profit before taxation				(60,513)		1,473,473
	Taxation				16,543		22,866
	(Loss) / Profit for the year				(43,970)		1,496,339
	Share of other comprehensive loss of associate				(26,702)		(540,407)
	Total comprehensive (loss) / profit				(70,672)		955,932
	Attributable to equity holders of the Company				(70,672)		955,932
	(Loss) / Earnings per share:
	Basic				(0.18p)		5.82p
	Diluted				(0.18p)		5.82p
	Before impairment				12.17p		16.84p

Consolidated statement of financial position as at 30 June 2016

			30 June      2016           £		Restated    30 June    2015    £
Assets
Non-current assets
Investment in associate		25,000,000		25,000,000
		25,000,000		25,000,000
Current assets
Trade and other receivables		34,173		30,660
Cash and cash equivalents		633		16,969
		34,806		47,629
Total assets		25,034,806		25,047,629
Equity and liabilities
Capital and reserves attributable to equity holders of the parent
Share capital		2,541,136		2,541,136
Capital redemption reserve		273,183		273,183
Merger reserve		2,402,674		2,402,674
Retained profits		19,718,022		19,788,694
Total equity		24,935,015		25,005,687
Current liabilities
Trade and other payables		96,423		40,480
Corporation tax payable		3,368		1,462
		99,791		41,942
Total equity and liabilities		25,034,806		25,047,629

The financial statements were approved by the Board of Directors and authorised for issue on 12 December 2016.

Michael Rosenberg OBE

Director

Company registration number: 03955206

Consolidated statement of cash flows for the year ended 30 June 2016

			Restated
		Year ended 30 June 2016 £	Year ended 30 June 2015 £
Cash flow from operating activities
Profit / (loss) before taxation		(60,513)	1,473,473
Adjustments for:
Share of profit from associate		(3,409,845)	(4,400,080)
Impairment of associate		3,014,622	2,832,788
Transitional adjustment		368,521
Finance income		(7)	(1,012)
Finance expense		186	(160)
Corporation taxes recovered		18,449	14,962
Net cash flow used in operating activities before changes in working capital		(68,587)	(80,029)
Decrease / (increase) in trade and other receivables		(3,513)	439
Increase / (decrease) in trade and other payables		55,943	9,080
Net cash flow used in operating activities		(16,157)	(70,510)
Investing activities
Dividend received		-	1,026,884
Interest received		7	1,012
Net cash flow from investing activities		7	1,027,896
Financing activities
Shares purchased into Treasury		-	(1,478,993)
Interest paid		(186)	160
Net cash flow used in financing activities		(186)	(1,478,833)
Net decrease in cash and cash equivalents in the year		(16,336)	(521,447)
Cash and cash equivalents at the beginning of the year		16,969	538,416
Cash and cash equivalents at the end of the year		633	16,969

Notes

1 Investment in associate Year Ended 30 June 2016		Share of net  assets	Fair Value of   Intangibles	Total
		Group	Group	Group
		£	£	£
At 1 July 2015 - Restated		16,553,835	8,446,165	25,000,000
Transitional adjustment		(368,521)	-	(368,521)
Share of profit - 2016		3,409,845	-	3,409,845
Share of other comprehensive loss - 2016		(26,702)	-	(26,702)
Dividend received - 2016		-	-	-
Impairment - 2016		-	(3,014,622)	(3,014,622)
At 30 June 2016 - CMG share of SIS net assets		19,568,457	5,431,543	25,000,000

Year Ended 30 June 2015 - restated		Share of net  assets	Fair Value of   Intangibles	Total
		Group	Group	Group
		£	£	£
Cost
At 1 July 2014 - as previously stated		13,786,363	11,213,637	25,000,000
Prior year adjustment		(65,316)	65,316	-
Share of profit - 2015 Restated		4,400,080	-	4,400,080
Share of other comprehensive loss - 2015 restated		(540,407)	-	(489,407)
Dividend received - 2015		(1,026,885)	-	(1,026,885)
Impairment - 2015 Restated		-	(2,832,788)	(2,836,073)
At 30 June 2015 - CMG share of SIS net assets		16,553,835	8,446,165	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 Catalyst Media Group plc.

A copy of the strategic forecast prepared by SIS was made available to the Directors of CMG showing management forecasts through to 2020/2021 of the income statement, statement of financial position and statements of cash flow. The assumptions made by management were also provided.

It is expected that the net operating profits of SIS would significantly fall to a much lower level due to the change in margins arising from media rights ownership.

This fall would be partially offset by new initiatives in creating additional revenue streams from new digital content and new streaming platforms.

After reviewing the forecasts and other factors, the Directors concluded that the carrying value of the investment should continue at £25 million.

1 Investment in associate (continued)

Transitional adjustment

The prior year figures within the financial statements of SIS were restated following the transition to reporting under FRS 102.

The transitional adjustment represents CMG's share of the restatements in the SIS accounts relating specifically to the defined benefit pension plan, derivative financial instruments and deferred tax, less any estimates CMG had made in its accounts in relation to these figures which were historically required for CMG's accounts to be correctly stated under IFRS and are no longer required as the SIS accounts are now prepared under FRS 102.

Following the restatements in the SIS accounts, there has been a decrease of £3k to the overall share of profit of associate stated for 2015 and a decrease of £3k to the impairment charge stated for 2015. There has therefore been no impact on the value of CMG's investment which remained at £25,000,000. There was also no impact on the net assets of CMG as at 30 June 2015.

Share of profit of associate	2016 SIS Total £'000	2016 CMG share £'000	2015 Restated CMG share £'000
Revenue:
SIS Betting Services	209,284	42,987	42,591
SIS LIVE Services	18,646	3,830	4,453
Total revenue	227,930	46,817	47,044
Operating profit	20,360	4,182	5,313
Net interest receivable / (payable)	458	94	(115)
(Losses) / profits on business wind down	(490)	(101)	218
Profit on disposal of joint venture	642	132	-
Profit on disposal of associate	-	-	8
Profit on disposal of fixed asset	317	65	1
Profit before tax	21,287	4,372	5,425
Taxation	(4,686)	(962)	(1,025)
Share of profit after taxation	16,601	3,410	4,400
Net income from associate	16,601	3,410	4,400
Other comprehensive income:
Actuarial loss	(1,500)	(308)	(616)
Deferred tax	33	7	134
Change in value of hedging instrument	1,337	274	(58)
	(130)	(27)	(540)
Share of net assets and liabilities of associate
Net assets	159,128	32,685	30,074
Net liabilities	(63,858)	(13,117)	(13,520)
Net equity	95,270	19,568	16,554

2 Basis of preparation

These consolidated financial statements of Catalyst Media Group plc 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.

Catalyst Media Group plc 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 2016 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 13 January 2017.

 

END

 

 

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