Final Results

RNS Number : 2819E

Catalyst Media Group PLC

25 September 2008

 



Catalyst Media Group Plc

Preliminary Results for Year Ended 31 March 2008

Catalyst Media Group Plc (CMG) today announces its final results for the year ended 31 March 2008.

Financial Highlights

Profit after tax £1.0 million (2007: loss £3.3 million).

Profit after tax arising from continuing operations £1.1 million (2007: loss £2.5 million).

Net Assets of £22.9 million (2007: £11.9 million).

Earnings per share from continuing operations:  3.9p (2007: a loss per share of 33.8p). 

Net borrowings: £7.3 million (2007: £17.5 million)

Enquiries:

Michael Rosenberg/ Alan Perrin

Catalyst Media Group plc

[phone]

James Harris / Angela Peace

Strand Partners Limited 

[phone]

Chairman's statement

During the year under review the Board of Catalyst Media Group Plc (CMG) has continued the process of reducing overheads with a view to focusing its main activity on the holding in Satellite Information Services (Holdings) Ltd ('SIS'). In addition it has progressed the development of the two games referred to in previous statements to shareholders, namely Tringo and Spoof. 

The funds raised in the Placing and Open Offer on 10 April 2007 enabled the repayment of a significant proportion of the outstanding facility with Investec, which substantially de-geared the Group. The balance of the Investec facility was repaid using funds raised from new loans provided by NatWest Bank. As a consequence total debt as at 31 March 2008 amounted to £7.3 million (2007: £17.3 million).  

In April 2008 Newsplayer International Limited was sold for £225,000. This completes the exit from previous businesses owned by the Group save for the development of the games referred to above. Royalties are still receivable from Global Media Services Inc until 31 December 2009.

For the year ended 31 March 2008 the Group showed profit after tax of £1.0 million (2007: a loss of £3.3 million). Net assets at the balance sheet date were £22.9 million (£11.9 million).  

SIS

For the year to 31 March 2008 SIS reported revenues of £ 159 million (2007: £138 million) and profit before taxation of £26.1 million (2007: £24.3 million). CMG owns 20.54% of SIS and has accounted for its share of the profits of SIS as an equity-accounted associate in the consolidated financial statements.

SIS has three principal activities namely:

• The provision of satellite news gathering and associated transmission services through its market leading SISLINK division (Uplink Services);

• The long established business of providing integrated TV and information services delivered via satellite to licensed betting offices in the UK, Ireland and overseas (Racing Services); and

• The provision of TV production services for other broadcasters (Other Services).

The SISLINK division was materially increased in size by the acquisition on 1 April 2008 of the assets of 'BBC Outside Broadcasts', formerly a division of BBC Resources Limited.

During the year Turf TV launched a TV service providing coverage of horseracing to the UK and Ireland's Bookmakers. Despite this the SIS group has strengthened its position and is delivering all of the televised services into more than 65% of the market. It is now one of the most experienced television production and outside broadcast service providers in Europe. With the acquisition of the 'BBC Outside Broadcasts' the business has further enhanced its leading position. The SISLink division launched a US alliance with Intelsat, the world's leading supplier of commercial satellite services, to market its successful uPod product into the US market.

During the year ended 31 March 2008 SIS paid a dividend of £10 million to shareholders and has a policy in place to pay dividends of not less than 50% out of retained profits subject only to cash flow considerations. 

Directors

Anna Prestwich, the Chief Financial Officer of the company resigned in May 2008. 

AGM

The notice of AGM includes two items of special business. The first is a proposal to allow the Company to purchase shares in the market up to a limit of 15% of the issued share capital. While the company has no immediate plans to do so it does enable such action to be taken as and when the Board feels this would benefit shareholders.

The second is a proposal to extend the percentage of the share capital that can be issued for cash without the need to offer such shares to all shareholders. The present authority is limited to 5% and the current proposal is to increase this to 15%. This authority will expire on 4 April 2012. 

Conclusion

The future of the Company is now materially linked to the trading prospects for SIS. We are represented on the SIS Board and participate in major strategic decisions. SIS continues to trade profitably in its core businesses and the acquisition of the 'BBC Outside Broadcast' business will add significantly to the scale of the SISLink business which will also benefit from the joint venture with Intelsat. However during the year to 31 March 2009 SIS will incur one-off integration and acquisition costs relating to that business which may impact on earnings for that year.

The online games of Tringo and Spoof are not considered core businesses for the Company but in line with its contractual obligations, it is intended to find the best route to bring them to market as soon as practicable.

Meanwhile the overheads of CMG have been reduced and, excluding financing costs related to the SIS investment and the retirement of older debt and other exceptional costs, were £642,703 (2007: £989,447). The total administrative costs for 2008 include a number of non-recurring items. Costs incurred in the operation of our day-to-day continuing businesses in 2008 were approximately £379,900.  For the year ending 31 March 2009 overheads are expected to continue to reduce.

Michael Rosenberg OBE

Chairman

  Consolidated income statement

		Note	2008	2007
			£	£
			Unaudited	Unaudited
	Revenue		130,337	40,742
	Cost of sales		-	(985)
	Gross profit		130,337	39,757
	Administrative expenses		(642,703)	(989,447)
	Loss on sale of subsidiary		(21,561)	-
	Share-based payments released		-	83,920
	Profit on sale of investment		-	151,075
	Impairment of goodwill		-	(1,840,615)
	Impairment of development costs		(129,254)	(1,060,097)
	Total administrative expenses		(793,518)	(3,655,164)
	Operating loss		(663,181)	(3,615,407)
	Financial income		64,646	7,666
	Financial costs		(1,809,778)	(1,227,128)
	Net financial costs		(1,745,132)	(1,219,462)
	Share of profit from equity-accounted associate		2,814,023	1,307,692
	Profit/(loss) before taxation		405,710	(3,527,177)
	Taxation	2	687,000	1,010,757
	Profit/(loss) for the year from continuing operations		1,092,710	(2,516,420)
	Loss for the year from discontinued operations		(132,634)	(754,791)
	Profit/(loss) for the year		960,076	(3,271,211)
	Loss for the period attributable to minority interests		-	198,371
	Profit/(loss) attributable to equity holders of the Company		960,076	(3,072,840)

Earnings/(loss) per share
Basic	3	3.4p	(44.8p)
Diluted	3	3.4p	(44.8p)
Earnings/(loss) per share from continuing operations:
Basic	3	3.9p	(33.8p)
Diluted	3	3.9p	(33.8p)

Consolidated balance sheet

		2008 £	2007 £
		Unaudited	Unaudited
Assets
Non-current assets
Goodwill		-	104,744
Intangible assets		66,447	230,349
Property, plant and equipment		758	54,892
Investment in associate	4	28,909,152	28,148,814
		28,976,357	28,538,799
Current assets
Trade and other receivables		526,190	1,401,669
Cash and cash equivalents		1,209,088	1,948,586
		1,735,278	3,350,255
Total assets		30,711,635	31,889,054
Equity and liabilities
Capital and reserves attributable to equity holders of the parent
Share capital		9,243,197	7,143,197
Share premium		38,904,450	30,896,287
Merger reserve		2,402,674	2,402,674
Share option reserve		-	388,526
Retained deficit		(27,610,843)	(28,959,445)
Total equity		22,939,478	11,871,239
Non-current liabilities
Interest-bearing loans and borrowings	5	7,312,689	17,305,000
Current liabilities
Interest-bearing loans and borrowings	5	-	160,000
Trade and other payables		459,468	2,552,815
		459,468	2,712,815
Total equity and liabilities		30,711,635	31,889,054

         Consolidated statement of changes in equity

Attributable to equity holders of the Company

	Share Capital	Share Premium	Merger Reserve	Share option reserve	Retained deficit	Total shareholders equity	Minority interests	Total equity
	£	£	£	£	£	£	£	£
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
At 1 April 2006	6,272,361	27,928,193	2,402,674	472,446	(25,688,234)	11,387,440	2,248,420	13,635,860
Loss for the year	-	-	-	-	(3,271,211)	(3,271,211)	(198,371)	(3,469,582)
Total recognised income and expense for the year	-	-	-	-	(3,271,211)	(3,271,211)	(198,371)	(3,469,582)
Minority interest acquired in the year	-	-	-	-	-	-	(2,050,049)	(2,050,049)
Shares issued in year	870,836	2,968,094	-	-	-	3,838,930	-	3,838,930
Share-based payment adjustment	-	-	-	(83,920)	-	(83,920)	-	(83,920)
At 31 March 2007	7,143,197	30,896,287	2,402,674	388,526	(28,959,445)	11,871,239	-	11,871,239
At 1 April 2007	7,143,197	30,896,287	2,402,674	388,526	(28,959,445)	11,871,239	-	11,871,239
Profit for the year	-	-	-	-	960,076	960,076	-	960,076
Total recognised income and expense for the year	-	-	-	-	960,076	960,076	-	960,076
Shares issued in year	2,100,000	8,400,000	-	-	-	10,500,000	-	10,500,000
Share issue expenses	-	(391,837)	-	-	-	(391,837)	-	(391,837)
Share-based payment adjustment	-	-	-	(388,526)	388,526	-	-	-
At 31 March 2008	9,243,197	38,904,450	2,402,674	-	(27,610,843)	22,939,478	-	22,939,478

Consolidated cash flow statement

		2008 £	2007 £
		Unaudited	Unaudited
Cash flow from operating activities
Profit/(loss) before taxation including discontinued operations		273,076	(4,281,968)
Adjustments for:
Depreciation, amortisation and impairment		168,522	1,863,581
Share of profit from associate		(2,814,023)	(1,307,692)
Loss/(profit) from sale of subsidiary and interest in associate		61,566	(151,705)
Loss on sale of plant and equipment		113	-
Finance income		(64,646)	(7,666)
Finance expense		1,809,778	1,227,128
Corporation taxes recovered		618,887	1,010,758
Equity-settled share-based payment credit		-	(83,920)
Net cash flow from operating activities before changes in working capital		53,273	(1,731,484)
Decrease/(increase) in trade and other receivables		256,592	(919,025)
Increase/(decrease) in trade and other payables		(1,442,966)	1,398,984
Net cash flow used in operating activities		(1,133,101)	(1,251,525)
Investing activities
Payments for property, plant and equipment		(669)	(1,982)
Payments in respect of development licences		-	(950,000)
Dividend received from associate		2,053,685	-
Interest received		64,646	7,666
Sale of subsidiary		93,248	-
Acquisition of minority interest		-	(3,742,926)
Net cash flow from investing activities		2,210,910	(4,687,242)
Financing activities
Issue of ordinary shares		10,500,000	2,618,634
Cost of share issue		(391,837)	-
Proceeds from long-term borrowings		7,312,689	17,305,000
Repayment of long-term borrowings		(17,465,000)	(11,443,403)
Interest and early redemption fees paid		(1,773,159)	(1,227,128)
Net cash flow from financing activities		(1,817,307)	7,253,103
Net (decrease)/increase in cash and cash equivalents in the year		(739,498)	1,314,336
Cash and cash equivalents at the beginning of the year		1,948,586	634,250
Cash and cash equivalents at the end of the year		1,209,088	1,948,586

Notes

1.  Basis of preparation and significant accounting policies

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 1985 applicable to companies reporting under IFRS. These consolidated financial statements are the first Catalyst Media Group plc financial statements to be prepared in accordance with IFRS, the transition date being 1 April 2006.

First-time adoption 

In preparing these financial statements, the Group has elected to apply the following transitional arrangements permitted by IFRS1 'First-time Adoption of International Financial Reporting Standards

• Business combinations effected before 1 April 2006, including those that were accounted for using the merger method of accounting under UK accounting standards, have not been restated.

• Only those exchange differences arising on the retranslation of foreign operations since 1 April 2006 have been recognised as a separate component of equity, with the related reserve being set to zero at that date. There have been no material movements to this reserve since this date.

• IFRS2 'Share-based payments' has been applied to employee options granted after 7 November 2002 that had not vested by 1 January 2006.

The Group has made estimates under IFRSs at the date of transition, which are consistent with those estimates made for the same date under UK GAAP unless there is objective evidence that those estimates were in error, i.e the Group has not reflected any new information in its opening IFRS balance sheet but reflected that new information in its income statement for subsequent periods. 

The financial information set out above does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the twelve months to 31 March 2007, on which the report of the auditors was unqualified and did not contain a statement under section 237 of the Companies Act 1985, have been filed with the Registrar of Companies. The Statutory accounts to 31 March 2007 were prepared under UK GAAP.

2.  Taxation			2008 £	2007 £
Current tax			624,519	879,740
Under-provision in respect of prior periods			62,481	72,067
Deferred tax			-	58,950
Total tax credit for the year			687,000	1,010,757

The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the loss before tax is as follows:

Factors affecting tax charge for the year

The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30%).

			2008 £	2007 £
	Profit/(loss) before tax including discontinued activities		273,076	(4,281,968)
	Tax on loss at standard rate of 30%		81,923	(1,284,590)
	Expenses not deductible for tax purposes		22,462	864,217
	Income not taxable		(727,649)	(451,258)
	Other timing differences		(1,255)	(8,109)
	Under-provision in respect of prior periods		(62,481)	(72,067)
	Deferred tax		223,333	(58,950)
	Tax losses for which no deferred tax asset was recognised		(223,333)	-
	Current tax credit		(687,000)	(1,010,757)

Factors that may affect the future tax charge

Deferred tax has not been provided in respect of timing differences relating primarily to revenue losses and management expenses as there is insufficient evidence that the benefit of the losses will be recovered. The amount of the asset not recognised is £3,287,900 (2007: £2,954,400). After 31 March 2008, a change in UK corporation tax rate was announced. The above deferred tax asset has been calculated based on a UK tax rate of 28% as applicable at 1 April 2008.

3.  Earnings/(loss) per share

The calculation of the basic earnings/(loss) per share arising is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £960,076 (2007: loss of £3,072,840) and a weighted average number of shares in issue for the year of 27,971,066 (2007: 6,862,178 restated).  The calculation of the basic earnings/(loss) per share arising in respect on continuing operations is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £1,092,710 (2007: loss of £2,318,049) and a weighted average number of shares in issue for the year of 27,971,066 (2007: 6,862,178 restated).  The calculation of the basic loss per share arising from discontinued operations (note 5) is based upon the net loss after tax and minority interests attributable to ordinary shareholders of £132,634 (2007: loss of £754,791) and a weighted average number of shares in issue for the year of 27,971,066 (2007: 6,862,178 restated). Diluted earnings per share The calculation of the diluted earnings/(loss) per share arising is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £960,076 and a weighted average number of shares in issue for the year of 28,151,066. The diluted loss per share in 2007 is the same as the basic loss per share in 2007 as the losses have an anti-dilutive effect. The calculation of the basic earnings/(loss) per share arising in respect on continuing operations is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £1,092,710 and a weighted average number of shares in issue for the year of 28,151,066. The diluted loss per share from continuing operations in 2007 is the same as the basic loss per share from continuing operations in 2007 as the losses have an anti-dilutive effect. Reconciliation of basic and diluted number of shares in issue:

		Year ended 31 March
		2008
		Group
		No
	Weighted average number of shares in issue	27,971,066
	Warrants to subscribe for shares in the Company	180,000
	Diluted weighted average number of shares in issue	28,151,066

4.  Investment in associate		Share of net assets	Fair Value of Intangibles	Total
		Group	Group	Group
		£	£	£
Cost
At 1 April 2006		2,946,454	22,447,965	25,394,419
Additions - share of profit		1,731,000	-	1,731,000
Amortisation charged in year		-	(423,308)	(423,308)
Disposal		(2,445,434)	-	(2,445,434)
Transfer from goodwill		3,892,137	-	3,892,137
At 31 March 2007		6,124,157	22,024,657	28,148,814
Additions - share of profit		3,660,639	-	3,660,639
Amortisation charged in year		-	(846,616)	(846,616)
Dividend received		(2,053,,685)	-	(2,053,685)
At 31 March 2008		7,731,111	21,178,041	28,909,152

The Group's interest in the associate, Satellite Information Services (Holdings) Limited, a company incorporated in Great Britain, (SIS) 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 (CMHL) a wholly-owned subsidiary of the Company. In 2007 the Company acquired the remaining 20% holding in CMHL it did not own and the amount apportioned to goodwill on this acquisition has been transferred to the cost of investment in the associate. In 2007 the Group disposed of part of its holding in SIS representing 1.67% of the equity share capital of SIS. The intangible assets recognised upon acquisition of the Group's interest represent customer contracts and relationships. These are amortised over a period of 20 years.

Share of profit of associate		2008 Group £'000	2007  Group £'000
Revenue:
UK racing		25,029	20,950
Satellite uplink services		2,860	2,349
Other services		4,764	5,146
Total revenue		32,653	28,445
Operating profit		4,956	4,806
Net interest receivable		401	191
Profit before tax		5,357	4,997
Taxation		(1,673)	(1,515)
Share of profit after taxation		3,684	3,482
Share of other reserve movements		(23)	(1,751)
Retained profit transferred to reserves		3,661	1,731
Amortisation of fair-value of intangible asset		(847)	(423)
Net income from associate		2,814	1,308

Share of net assets and liabilities of associate
Net assets		13,998	11,908
Net liabilities		(6,175)	(5,688)
Net equity		7,823	6,220
Other adjustments		(92)	(96)
		7,731	6,124

5.  Interest-bearing loans and borrowings

		Non-current	Non-current	Non-current	Non-current
		Group	Group	Company	Company
		£	£	£	£
		2008	2007	2008	2007
	NASCIT loan (see below)	3,500,000	-	3,500,000	-
	NatWest loan	3,812,689	-	-	-
	Investec loan facility	-	17,305,000	-	-
		7,312,689	17,305,000	3,500,000	-

	Current	Current	Current	Current
	Group	Group	Company	Company
	£	£	£	£
	2008	2007	2008	2007
Convertible loan notes	-	160,000	-	160,000

On 24 August 2007, CMG borrowed a further £3.91m from National Westminster Bank plc which is due to repaid no later than 31 December 2010. Interest is rolled up into the loan balance and is payable at 2.75% margin above the Bank of England base rate. The terms of the loan contain a condition that if the Company's interest-bearing indebtedness outstanding at 31 October 2008 is not less than £2.75 million then an additional fee of £250,000 will be added to the loan value. This fee has not been accrued within the financial statements. The Group is required to apply all SIS dividends received against this loan in priority to other uses. The loan is also secured by a fixed and floating charge over the Group's assets.

On 10 April 2007, the Company borrowed £3.5m from North Atlantic Smaller Companies Investment Trust (NASCIT) and Oryx International Growth Fund Limited which is due to be repaid by 10 April 2009. Interest is paid quarterly and is payable at a fixed rate of 13.25% per annum. The loan has now been amalgamated into NASCIT only and it has a second fixed and floating charge over the Group's assets after NatWest. 

The loan facility with Investec Bank (UK) Limited was a total facility of £18,605,000 of which £17,305,000 had been drawn down by 31 March 2007. The loan was repaid in full during the year. 

The £160,000 convertible loan note was repaid in full during the year. No element of the loan was converted into the Company's share capital.

6.  Annual Report

The Annual Report for the year ended 31 March 2008 is being posted to shareholders today and is also available from the Company's website www.cmg-plc.com. The Annual General Meeting of the Company will be held at the offices of Lewis Silkin, 5 Chancery Lane, Clifford's Inn, London EC4A 1BL on Monday 27th October 2007 at 11am.

 

END

 

 

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