Final Results

RNS Number : 9081Z

Catalyst Media Group PLC

30 September 2009

 



CATALYST MEDIA GROUP PLC

Catalyst Media Group Plc('CMG') is pleased to announce its final results for the year ended 31 March 2009 

CMG is a 20.54% shareholder in Satellite Information Services (Holdings) Ltd ('SIS') and the results below include its share of SIS profits as an equity accounted associate.

SIS' principal activities are:

     1.    a long-established business providing integrated television and information services delivered via satellite
            to licensed betting offices in the United Kingdom, Ireland and overseas( Racing Services);

     2.    the provision of satellite news-gathering and associated transmission services; and

     3.    the provision of outside broadcast television production units, including sound, support and  communication.

Financial Highlights

• CMG profit after tax increased by 256% to £2.46 million (2008 - £0.96 million)
• Earnings per share (EPS) 8.8p (2008 - 3.4p)
• Cash dividend received from SIS during the year £3.1 million (2008 : £2.1 million)
• CMG debt reduced from £7.3 million to £3.76 million
• Net asset value per share increased by 11% to 90p (2008 - 81p)
• CMG overheads continue to reduce and further reductions expected
• Launch of games planned for 2009/10
• Major reorganisation to focus on 20.54% investment in Satellite Information Services(Holdings) Ltd (SIS) now completed
• SIS Revenues for year to 31 March 2009 £193 million (2008 - £158 million)
• SIS EBITDA for period £35.6 million (2008 - £32.2 million)
• SIS Operating profit from ongoing operations £25.3 million (2008 - £24.1 million)
• SIS Cash £31 million (2008 - £32 million)
• SIS has a secured revenue stream with long term media rights contracts agreed up to the end of 2016
• SIS expected to pay a dividend by the end of December 2009 and has a policy in place to pay dividends of not less than 50% out of retained profits subject only to cash flow considerations.

Michael Rosenberg , the Chairman commented 

'We are pleased to report that during the current financial year the SIS Group has been successful in strengthening its position in its marketplace after the dismissal of the legal dispute with its competitor Turf TV in August 2008 for which SIS was awarded substantial costs. Further to this SIS is now delivering not only its own televised services but also those of Turf TV into more than 75% of the UK market. 

Since the year end SIS has now secured the future of its revenue stream from UK racing pictures by agreeing long-term media rights agreements with Arena Leisure and Northern Racing, the major operators in this sector, up to the end of 2016.

Following the acquisition by SIS of BBC's Outside broadcast business, it is now one of the most experienced television, production and outside broadcast service providers in Europe. It is also the largest provider of transportable satellite uplink services in the world, covering 100,000 hours of live events each year including Formula One, The Wimbledon Championships, UEFA Champions League football and European Tour Golf.

We have reduced CMG's borrowings and with a continued dividend policy from SIS we hope to be able to give consideration to the payment of dividends to shareholders by the end of 2010.

Chairman's Statement for the year ended 31 March 2009

During the year under review the Board of CMG has continued the process of reducing overheads with a view to focusing the Group's main activity on its holding of 20.54% in SIS.

CMG has equity accounted its share of the SIS profits and for the year ended 31 March 2009 the Group showed profit after tax of £2.4 million (2008: £1.0 million) representing an increase of approximately 246 per cent and EPS of 8.4p(2008: 3.4p). Net Assets at the balance sheet date were £25.3 million (2008: £22.9 million) representing a net asset per share value of approximately 90p(2008: 81p).  

SIS

For the year ended 31 March 2009, SIS reported revenues of £193 million (2008: £159 million), profit from ongoing operations of £25.3 million (2008: £24.1 million) and profit before taxation of £21.3 million (2008: £26.1 million). 

The principal activities of SIS are:

• The provision of satellite news-gathering and associated transmission services through its market leading SISLINK division, which now accounts for the major contribution to its continuing profitability (Uplink Services);
• The provision of outside broadcast television production units, including sound, support and communication (Outside Broadcast);
• The provision of television production services for other broadcasters(Other Services); and
• The long established business providing integrated TV and information services delivered via satellite to licensed betting offices in the UK, Ireland and overseas (Racing Services).

The SIS Group acquired the BBC Outside broadcast business on 1 April 2008 and is now one of the most experienced television, production and outside broadcast service providers in Europe. With a fleet of over 110 uplinks covering the spectrum of state-of-the-art uplink trucks, its proprietary automated Upod technology and its rapidly deployed, dismountable Drive Fly kits, it is now the largest provider of transportable satellite uplink services in the world. It covers 100,000 hours of live events worldwide each year, including Formula One, The Wimbledon Championships ,UEFA Champions League football and European Tour Golf and delivers approximately 80% of live news feeds across the UK. 

During the year ended 31 March 2008, Turf TV, a competitor of SIS, launched a TV service providing coverage of horseracing to the UK and Ireland's Bookmakers. Turf TV's High Court claim against SIS was comprehensively dismissed in August 2008 and SIS was awarded significant costs. 

The SIS Group has subsequently strengthened its position and is delivering not only its own televised services, but also those of Turf TV into more than 75% of the UK market. The SIS Group intends to stay ahead of the competition by offering visual and data services that are of the highest quality and competitively priced.

On 22 July 2009 it was announced that SIS had signed a long term agreement with Arena Leisure plc ('Arena'), the UK's leading operator of horseracing fixtures, which owns and operates seven race courses in the UK. The rights agreement ensures that SIS will continue to provide horse racing images from Doncaster, Royal Windsor, Folkestone, Lingfield Park, Southwell, Wolverhampton and Worcester in its services to Licensed Betting Offices until the end of 2016. The tracks include all weather and floodlit courses that ensure racing is available to bookmakers all year round and during the increasingly important evening trading period.

Furthermore SIS has signed a long term agreement with Northern Racing Ltd an operator of ten racecourses in the UK including Chepstow and Fontwell Park. The agreement now runs to 2017.

OTHER ACTIVITIES

In addition to focussing on its investment in SIS, CMG has also continued the development of the two on line games, namely Tringo and Spoof, that have been referred to in previous statements. CMG are in active discussions to bring these games to market in the near term. 

In April 2008, Newsplayer International Limited was sold for £225,000. This completed the exit from previous businesses owned by the Group save for the development of the games referred to above. 

SIS DIVIDEND POLICY

During the year ended 31 March 2009, SIS paid a dividend of £15 million to shareholders and has a policy in place to pay dividends of not less than 50% of retained profits subject only to cash flow needs. Assuming that dividends continue to be distributed by SIS it is anticipated that borrowings within CMG Group will continue to reduce which will enable the Board to give consideration to the payment of dividends by the end of 2010.

Conclusion

SIS continues to trade profitably in its core businesses with long term income secured. In addition the acquisition of the 'BBC Outside Broadcast' business has added significantly to the scale of the SISLINK business. 

The online games of Tringo and Spoof have now reached the stage where they can be commercially exploited and active discussions are underway with a view to seeking to bring them to market in the near term

Meanwhile the overheads of CMG continue to be reduced and, excluding financing costs related to the SIS investment and the retirement of older debt and other exceptional costs, were £324,651 for the year (2008: £642,703). These are anticipated to be further reduced in the year ending 31 March 2010. 

Michael Rosenberg OBE

Chairman

Enquiries:

Melvin Lawson

Catalyst Media Group plc 

020 7637 8412

James Harris/Angela Peace

Strand Partners Limited 

020 7409 3494

Consolidated income statement

	2009	2008
	£	£
Revenue	92,392	130,337
Cost of sales	(2,990)	-
Gross profit	89,402	130,337
Administrative expenses	(324,651)	(642,703)
Loss on sale of subsidiary	-	(21,561)
Profit on sale of investment	-	-
Impairment of development costs	(66,447)	(129,254)
Total administrative expenses	(391,098)	(793,518)
Operating loss	(301,696)	(663,181)
Financial income	32,322	64,646
Financial costs	(906,563)	(1,809,778)
Net financial costs	(874,241)	(1,745,132)
Share of profit from equity-accounted associate	3,114,275	2,814,023
Profit/(loss) before taxation	1,938,338	405,710
Taxation	310,000	687,000
Profit/(loss) for the year from continuing operations	2,248,338	1,092,710
Profit/(loss) for the year from discontinued operations	217,378	(132,634)
Profit/(loss) for the year	2,465,716	960,076
Loss for the period attributable to minority interests	-	-
Profit/(loss) attributable to equity holders of the Company	2,465,716	960,076
Earnings/(loss) per share:
Basic	8.8p	3.4p
Diluted (As restated 2008)	8.8p	3.4p
Earnings /(loss) per share from continuing operations:
Basic	8.0p	3.9p
Diluted (As restated 2008)	8.0p	3.9p

Consolidated balance sheet

	2009 £	2008 £
Assets
Non-current assets
Intangible assets	-	66,447
Property, plant and equipment	278	758
Investment in associate	28,942,897	28,909,152
	28,943,175	28,976,357
Current assets
Trade and other receivables	232,319	225,667
Corporation tax receivable	118,390	300,523
Cash and cash equivalents	72,951	1,209,088
	423,660	1,735,278
Total assets	29,366,835	30,711,635
Equity and liabilities
Capital and reserves attributable to equity holders of the parent
Share capital	9,243,197	9,243,197
Share premium	38,904,450	38,904,450
Merger reserve	2,402,674	2,402,674
Retained deficit	(25,145,127)	(27,610,843)
Total equity	25,405,194	22,939,478
Non-current liabilities
Interest-bearing loans and borrowings	3,763,899	7,312,689
Current liabilities
Trade and other payables	197,742	459,468
	197,742	459,468
Total equity and liabilities	29,366,835	30,711,635

Consolidated cash flow statement

	2009 £	2008 £
Cash flow from operating activities
Profit/(loss) before taxation including discontinued operations	2,465,716	273,076
Adjustments for:
Depreciation, amortisation and impairment	66,927	168,522
Effect of foreign currency translation movements	-	-
Share of profit from associate	(3,114,275)	(2,814,023)
Loss/(profit) from sale of subsidiary and interest in associate	(217,378)	61,566
Loss on sale of plant and equipment	-	113
Finance income	(32,322)	(64,646)
Finance expense	1,010,499	1,809,778
Corporation taxes recovered	310,000	618,887
Net cash flow from operating activities before changes in working capital	489,167	53,273
Decrease/(increase) in trade and other receivables	(134,519)	256,592
Increase/(decrease) in trade and other payables	82,751	(1,442,966)
Net cash flow used in operating activities	437,399	(1,133,101)
Investing activities
Payments for property, plant and equipment	-	(669)
Dividend received	3,080,530	2,053,685
Interest received	32,322	64,646
Sale of subsidiary	-	93,248
Net cash flow from investing activities	3,112,852	2,210,910
Financing activities
Issue of ordinary shares	-	10,500,000
Cost of share issue	-	(391,837)
Proceeds from long-term borrowings	3,763,899	7,312,689
Repayment of long-term borrowings	(7,312,689)	(17,465,000)
Interest paid	(1,137,598)	(1,773,159)
Net cash flow from financing activities	(4,686,388)	(1,817,307)
Net (decrease)/increase in cash and cash equivalents in the year	(1,136,137)	(739,498)
Cash and cash equivalents at the beginning of the year	1,209,088	1,948,586
Cash and cash equivalents at the end of the year	72,951	1,209,088

Notes to the financial statements

1.    Investment in associate

	Share of net assets	Fair Value of Intangibles	Total
	Group	Group	Group
	£	£	£
Cost
At 1 April 2008	7,731,111	21,178,041	28,909,152
Additions - share of profit	3,114,275	-	3,114,275
Amortisation charged in year	-	-	-
Dividend received	(3,080,530)	-	(3,080,530)
At 31 March 2009	7,764,856	21,178,041	28,942,897

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. The intangible assets recognised upon acquisition of the Group's interest represent customer contracts and relationships. These are subject to an annual impairment review.

Share of profit of associate	2009 SIS Total £'000	2009 CMG share £'000	2008  CMG Share £'000
Revenue:
UK racing	113,842	23,383	25,029
SIS live services	55,653	11,431	2,860
Other services	23,442	4,815	4,764
Total revenue	192,937	39,629	32,653
Operating profit from ongoing operations	25,346	5,206	4,956
Operating profit from acquisitions	(3,623)	(744)	-
	21,723	4,462	4,956
Net interest receivable	-	-	401
Net interest payable	(384)	(79)	-
Profit before tax	21,339	4,383	5,357
Taxation	(6,233)	(1,280)	(1,673)
Share of profit after taxation	15,106	3,103	3,684
Share of other reserve movements	56	11	(23)
Retained profit transferred to reserves	15,162	3,114	3,661
Amortisation of fair-value of intangible asset		-	(847)
Net income from associate		3,114	2,814
Share of net assets and liabilities of associate
Net assets	97,683	20,064	13,998
Net liabilities	(59,437)	(12,208)	(6,175)
Net equity	38,246	7,856	7,823
Other adjustments	-	(91)	(92)
	38,246	7,765	7,731

2.    Revenue

An analysis of the Group's revenue and income is as follows:

		2009 £	2008 £
Business administrative services		92,392	130,337
Leisure and media - discontinued		-	34,202
Total revenue		92,392	164,539

3.    Segmental analysis

A segment is a distinguishable component of the Group that is engaged in providing products or services in a particular business sector (business segment) or in providing products or services in a particular economic environment (geographic segment), which is subject to risks and rewards that are different in those other segments. The Group operated in the year in one segment, business administrative services and in one principal geographic area - the United Kingdom (UK). In April 2007 the Group sold its operations in the United States of America. Royalties were received from Global Media Services Inc in the year representing deferred consideration arising from the disposal of the Group's interest in that business in 2006. Management considers that this revenue arises from UK managed operations and is included within revenue arising from leisure and media activities.

The Group also holds a strategic investment in Satellite Information Services (Holdings) Limited.

Year ended 31 March 2009	SIS	Business administrative services	Unallocated activities	Total
	£	£	£	£
Revenue	-	92,392	-	92,392
Segment result	-	(235,249)	-	(235,249)
Impairment charges	-	-	(66,447)	(66,447)
Finance income	-	-	32,322	32,322
Finance costs	-	-	(906,563)	(906,563)
Share of profit of associate	3,114,275	-	-	3,114,275
Discontinued operations	-	217,378	-	217,378
Profit before tax	3,114,275	(17,871)	(940,688)	2,155,716
Tax	-	-	310,000	310,000
Profit for the year	3,114,275	(17,871)	(630,688)	2,465,716
Segment assets	28,942,897	423,938	-	29,366,835
Segment liabilities:
Continuing operations	-	(3,961,641)	-	(3,961,641)
Discontinued operations	-		-	-
Total liabilities	-	(3,961,641)	-	(3,961,641)
Net assets	28,942,897	(3,537,703)	-	25,405,194

Other segmental information

All capital expenditure, depreciation and amortisation and impairment charges in 2009 related to the Business Administrative Services segment.

Year ended 31 March 2008	SIS	Leisure and Media	Business administrative services	Unallocated activities	Total
	£	£	£	£	£
Revenue	-	-	130,337	-	130,337
Segment result	-	-	(499,279)	-	(449,279)
Impairment charges				(163,902)	(163,902)
Finance income	-	-	-	64,646	64,646
Finance costs	-	-	-	(1,809,778)	(1,809,778)
Share of profit of associate	2,814,023		-	-	2,814,023
Discontinued operations	-		(132,634)	-	(132,634)
Profit before tax	2,814,023		(631,913)	(1,909,034)	273,076
Tax	-		-	687,000	687,000
Profit for the year	2,814,023		(631,913)	(1,222,034)	960,076
Segment assets	28,909,152		1,802,484	-	30,711,636
Segment liabilities:
Continuing operations	-		(7,730,853)	-	(7,730,853)
Discontinued operations	-	(41,305)	-	-	(41,305)
Total liabilities	-	(41,305)	(7,730,853)	-	(7,772,158)
Net assets	28,909,152	(41,305)	(5,928,369)	-	22,939,478

Other segmental information

All capital expenditure, depreciation and amortisation and impairment charges in 2008 related to the Business Administrative Services segment.

4.    Operating loss (Group):

	2009 £	2008 £
Operating profit/ (loss) for the year is stated after charging/(crediting):
Depreciation of plant and equipment	480	4,620
Staff costs	36,460	239,639
Impairment of goodwill	-	104,744
Foreign exchange (gains)/losses	(21,376)	32,153
Impairment of intangible assets	66,447	163,902
Auditors remuneration	19,184	79,300
Operating lease rentals	50,000	50,000

5.    Earnings/(loss) per share

The calculation of the basic earnings/(loss) per share is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £2,465,716 (2008: £906,076) and a weighted average number of shares in issue for the year of 28,143,190 (2008: 27,971,066).

The calculation of the basic earnings/(loss) per share arising in respect of continuing operations is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £2,248,338 (2008: £1,092,710) and a weighted average number of shares in issue for the year of 28,143,197 (2008: 27,971,066).

The calculation of the basic loss per share arising from discontinued operations is based upon the net profit after tax and minority interests attributable to ordinary shareholders of £217,378 (2008: loss of £132,634) and a weighted average number of shares in issue for the year of 28,143,197 (2008: 27,971,066).

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 £2,465,716 (2008: £960,076) and a weighted average number of shares in issue for the year of 28,143,197 (2008: 27,971,066). The share warrants are deemed to 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 £2,248,338 (2008: £1,092,710) and a weighted average number of shares in issue for the year of 28,143,197 (2008: 27,971,066).  

The comparative for the diluted earning per share for the year ended 31 March 2008 has been restated as the warrants in issue were deemed to have an anti-dilutive effect.

Reconciliation of shares in issue:

	Year ended 31 March	Year ended 31 March
	2009	2008
		As Restated
	Group	Group
	Number	Number
Weighted average number of shares in issue	28,143,197	27,971,066
	28,143,197	27,971,066

6.    Basis of preparation and significant accounting policies

The 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. 

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. 

7.    Annual Report

The Annual Report for the year ended 31 March 2009 will be posted to shareholders today and will also be 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 26th October 2009 at 11am.

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