Interim Results

Catalyst Media Group PLC 30 November 2006 30 November 2006 CATALYST MEDIA GROUP PLC ('CMG' or the 'Company') INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Catalyst Media Group plc, the media company, today announces its interim results for the 6 months ended 30 September 2006. OVERVIEW CMG is a media company that manages and distributes high quality audio-visual content using interactive digital technology. Through its subsidiary and associated companies, CMG provides services to support clients' online strategies and is a partner to media companies in the digitalisation and distribution of broadcast content. CMG also holds its own rights, specialising in historic entertainment and educational content, generating revenues from the licensing of content globally to third parties. CMG also owns a 22.2% stake in Satellite Information Services (Holdings) Limited ('SIS'), the leading producer of video, audio and data to over 9,700 licensed betting offices in the UK and Ireland. SIS is also the leading satellite uplink contractor in Europe, providing link units to a variety of clients including television news companies and sports event organisers. OPERATIONAL HIGHLIGHTS In September 2006, the Company exercised its call option to acquire the 20% interest not held by it in its subsidiary Catalyst Media Holdings Limited ('CMHL') from Eureka Interactive Fund Ltd ('Eureka'), for a cash consideration of £5.5 million. CMHL is now a wholly owned subsidiary of CMG. As a result of this transaction CMG now owns a 22.2% stake in SIS and will therefore receive 22.2% of future dividends paid by SIS. The Board are confident that the enhanced interest will strengthen our earnings and net asset base. In September 2006 CMG also repaid the balance of £10.64 million to redeem the Deep Discount Bonds held by Eureka, which were issued to Eureka at the time of CMG's acquisition of an interest in SIS. In order to finance these transactions and the associated costs, CMG has drawn down £17.3 million of an £18.625 million facility that has been arranged with Investec Bank (UK) Limited ('Investec'), on terms which are more favourable than those provided by Eureka. SIS continues to perform ahead of expectations and the Board believes that a substantial dividend is to be paid in the first quarter of 2007, which, if paid, would be applied to the repayment of a significant proportion of the Investec facility. For the financial year ended 31 March 2006, SIS generated turnover of £127.6 million (2005: £117.7 million) and profit after tax of £14.6 million (2005: £11.8 million). In June 2006, the Company announced its intention to launch an on-line gaming platform complete with a suite of fixed odds and exclusive head to head games. CMG acquired an exclusive five year licence from YooMedia plc ('YooMedia') for the head to head version of Tringo and acquired the entire issued share capital of Spoof.com Limited which has developed a head to head version of the traditional pub game, 'Spoof'. YooMedia are developing the technology platform and integrating the games which will enable players to compete across mobile phones, television and computers. The platform is expected to be launched in the second quarter of 2007. FINANCIAL RESULTS The Company recorded a loss for the six month period ended 30 September 2006 of £0.5 million (compared to a loss of £1.4 million for the first six months to 30 April 2005 of the previous 17 month accounting period to 31 March 2006). This reflects the Board's continued commitment to reduce costs and de-risk the business following the acquisition of a stake in SIS in September 2005. There is no contribution in these results from the investment in SIS as no dividend was received during the period. SIS has, in the recent past, had a policy of declaring a dividend every four years. In line with this policy, the Board believes a significant dividend from SIS will be paid in the first quarter of 2007 which, if paid will have a direct impact on profits and earnings. No dividend has been paid or is proposed by the Company. OUTLOOK The acquisition of the remaining stake in SIS is a very positive development for the Group enhancing both asset value and dividend earnings potential. CMG is well placed to seek opportunities that will leverage our existing operating businesses and drive value for shareholders and is now actively examining ways to achieve this objective. Paul Duffen Chief Executive Officer Enquiries: Paul Duffen, Chief Executive Catalyst Media Group plc +44 20 7927 6699 Results for the 6 months ended 30 September 2006 Consolidated profit and loss account For the 6 months ended 30 September 2006 Note 6 months ended 5 months ended 17 months ended 30-Sep-06 31-Mar-06 31-Mar-06 (Unaudited) (Unaudited) (Audited) £ £ £ Turnover Continuing operations 1 138,949 166,217 391,003 Discontinued operations - 74,583 2,488,937 -------- -------- -------- 138,949 240,800 2,879,940 Cost of sales (11,695) (60,643) (2,237,219) -------- -------- -------- Gross profit 127,254 180,157 642,721 Operating expenses: - goodwill impairment - - (2,457,021) - other (661,558) (73,353) (4,238,600) Dividend income - - 2,205,403 -------- ------- --------- Operating profit /(loss) 2 Continuing operations (534,304) (1,406,367) (2,331,041) Discontinued operations - 1,513,171 (1,516,456) -------- -------- -------- (534,304) 106,804 (3,847,497) Loss on disposal of subsidiary - (310,519) (1,946,513) Interest receivable and similar income 3,112 1,619,488 99,704 Interest payable (493,771) (427,827) (710,334) -------- -------- -------- Profit/(loss) on ordinary activities before taxation (1,024,963) 987,946 (6,404,640) Taxation 329,500 547,250 699,249 -------- -------- -------- Profit/(loss) on ordinary activities after taxation (695,463) 1,535,196 (5,705,391) -------- -------- -------- Minority Interest 198,371 (150,957) (219,750) -------- -------- -------- Profit/(loss) for the period (497,092) 1,384,239 (5,925,141) -------- -------- -------- Note 3: Basic and diluted loss per ordinary share (0.07p) 0.28p (1.21p) Basic and diluted loss per ordinary share: continuing operations (0.07p) (0.45p) (0.94p) Basic and diluted loss per ordinary share: discontinued operations - 0.74p (0.27p) Consolidated Statement of Total Recognised Gains and Losses For the six months ended 30 September 2006 6 months ended 17 months ended 30 Sept 2006 31 March 2006 £ £ Loss for the period (497,092) (5,925,141) Currency translation difference 32,848 (69,746) -------- -------- Total recognised loss for the period (464,244) (5,994,887) ======== ======== Consolidated Balance Sheet As at 30 September 2006 Note At At 30-Sep 31-Mar 2006 2006 £ £ -------- -------- Fixed assets Intangible assets 4 10,072,760 3,067,352 Tangible assets 68,636 89,367 Investments 22,240,000 22,193,670 -------- -------- 32,381,396 25,350,389 Current assets Debtors 5 414,908 472,438 Cash at bank 773,636 634,250 -------- -------- 1,188,544 1,106,688 Creditors: amounts falling due within one year 6 (1,732,185) (4,022,475) -------- -------- Net current liabilities (543,641) (2,915,787) -------- -------- Total assets less current liabilities 31,837,755 22,434,602 Creditors: amounts falling due after more than one year 7 (17,305,000) (9,049,491) -------- -------- Net assets 14,532,755 13,385,111 ======== ======== Capital and reserves Called up share capital 7,143,196 6,272,361 Share premium account 30,896,287 27,928,193 Merger reserve 2,402,674 2,402,674 Profit and loss account (25,909,402) (25,466,537) -------- -------- Equity shareholders' funds 9 14,532,755 11,136,691 Minority interest - 2,248,420 -------- -------- 14,532,755 13,385,111 ======== ======== Consolidated Cash Flow Statement For the six months ended 30 September 2006 Note 6 months ended 17 months ended 30 Sept 2006 31 March 2006 £ £ Net cash inflow/(outflow) from operating activities 10 190,240 (2,236,529) Returns on investment and servicing of finance 11 (490,659) (610,630) Taxation 329,500 334,249 Capital expenditure 11 (616) (20,482) Acquisitions 11 (5,979,695) (23,115,000) --------- -------- Cash outflow before financing (5,951,230) (25,648,392) Financing 11 6,090,616 25,855,482 --------- -------- Increase in cash 12 139,386 207,090 ========= ======== Notes to the Accounts 1. Accounting policies and additional information These interim results for the six month period ended 30 September 2006 do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and have been neither reviewed nor audited by our auditors. The financial information for the 17 month period ended 31 March 2006 is derived from the statutory accounts for that period and have been delivered to the Registrar and included the auditors' report which was unqualified and did not contain a statement either under section 237(2) or 237(3) of the Companies Act 1985. The accounting policies are consistent with those applied in the preparation of the statutory accounts for the 17 month period ended 31 March 2006. Basis of accounting The financial statements are prepared under the historical cost convention. Basis of consolidation The group financial statements consolidate the financial statements of Catalyst Media Group plc and all of its subsidiaries at the period end. Newsplayer Limited has been consolidated using acquisition accounting principles but the difference between the nominal value of the shares issued by Catalyst Media Group plc in exchange for shares in Newsplayer Limited and the nominal value of the shares held in Newsplayer Limited has been transferred to a merger reserve. The interest in Satellite Information Services (Holdings) Limited is held as a fixed asset investment reflecting the underlying nature and purpose of the stake. All other subsidiaries have been consolidated using acquisition accounting principles. Revenue recognition and turnover Revenue is recognised under an exchange transaction with a customer, when, and to the extent that, the group obtains the right to consideration in exchange for its performance. Turnover represents amounts derived from the provision of services which fall within the group's ordinary activities after deduction of trade discounts and value added tax. Those services include internet web design, television programme editing and production, website administration and revenues from streamed advertising. 2. Operating loss on ordinary activities before taxation 6 months ended 17 months ended 30 Sept 2006 31 March 2006 £ £ Operating loss is stated after charging: Amortisation of goodwill 9,783 677,334 Depreciation 12,939 185,301 -------- --------- 3. Loss per share The calculation of basic loss per share has been based on the loss after taxation and minority interest for the period 6 months to 30 September 2006 of £497,092 (17 months to 31 March 2006; £5,925,141) and the weighted average number of ordinary shares in issue during the period of 686,217,802 (17 months to 31 March 2006; 488,640,167). The diluted loss per share calculation is identical to that used for basic earnings per share as the exercise of share options would have the effect of reducing the loss per ordinary share and therefore is not dilutive under the terms of the Financial Reports Standard 22 'Earnings per Share'. 4. Intangible fixed assets Development Licences Goodwill Intellectual Total Expenditure Property £ £ £ £ £ Cost At 1 April 2006 94,951 - 8,267,498 4,213,834 12,576,283 Additions 1,212,845 950,000 4,860,354 - 7,023,199 Disposals - - - - 0 Foreign exchange adjustments - - (14,449) - (14,449) -------- ------- ------- ------- -------- At 31 March 2006 1,307,796 950,000 13,113,403 4,213,834 19,585,033 ======== ======= ======= ======= ======== Amortisation At 1 April 2006 (94,951) - (5,200,146) (4,213,834) (9,508,931) Charge for the period - - (9,783) - (9,783) Disposals - - - - 0 Foreign exchange adjustments - - 6,441 - 6,441 -------- ------- -------- -------- -------- At 31 March 2006 (94,951) 0 (5,203,488) (4,213,834) (9,512,273) ======== ======= ======== ======== ======== Net book value At 30 Sept 2006 1,212,845 950,000 7,909,915 0 10,072,760 ======== ======= ======== ======== ======== At 31 March 2006 0 0 3,067,352 0 3,067,352 ======== ======= ======== ======== ======== Analysis of Acquisition During the period, Catalyst Media Group plc purchased the remaining 20% of its subsidiary Catalyst Media Holdings Limited ('CMHL') for £5.5 million , with costs total consideration was £5.97 million. The group also acquired the entire issued share capital of Spoof.com Limited for total consideration of £1.16 million. The fair value and book value of these company's assets were; At 30 Sept At 30 Sept At 30 Sept 2006 2006 2006 £ £ £ CMHL Spoof.com Total Limited Fixed Assets 4,623,000 150,287 4,773,287 Current Assets - 42,871 42,871 Creditors (2,548,000) - (2,548,000) -------- -------- -------- Net Assets 2,075,000 193,158 2,268,158 Goodwill arising on consideration 3,892,137 968,217 4,860,354 -------- -------- -------- Consideration 5,967,137 1,161,375 7,128,512 ======== ======== ======== 5. Debtors: At 30 Sept At 31 March 2006 2006 £ £ Trade debtors 99,316 112,547 Other debtors (including £116,717 due in greater than one year) 209,177 201,478 Prepayments and accrued income 106,415 158,413 --------- --------- 414,908 472,438 ========= ========= 6. Creditors: amounts falling due within one year At 30 Sept At 31 March 2006 2006 £ £ Bank loan and overdraft 47,457 121,028 Other loans (including convertible loan note) 390,000 1,640,612 Obligations under finance leases 116,562 285,134 Trade creditors 363,294 296,980 Other taxation and social security 93,198 61,799 Other creditors 338,522 516,390 Accruals and deferred income 383,152 1,100,532 --------- --------- 1,732,185 4,022,475 ========= ========= 7. Creditors: amounts falling due after more than one year At 30 Sept At 31 March 2006 2006 £ £ Loan 17,305,000 - Deep Discount bonds - 9,049,491 --------- --------- 17,305,000 9,049,491 ========= ========= 8.Changes in share capital In May 2006, 437,500 new 1p ordinary shares were issued to Paradine Productions Limited, a company owned by Sir David Frost OBE at 4p per share, 3,100,264 new 1p ordinary shares at 3.39p per share and 97,222 new 1p ordinary shares at 18p per share. In June 2006, 13,751,375 new 1p ordinary shares were issued at 4 pence per share to settle the sum of £1,085,612 payable to J. Servidio and S. Domenico under the Betelgeuse Stock Purchase Agreement resulting in a cash saving of £535,557. In July and September 2006, 32,777,782 and 11,666,664 respectively, new 1p ordinary shares were issued at 4.5 pence per share to YooMedia plc. In August 2006, 25,252,776 new 1p ordinary shares were issued at 4.5 pence per share for the acquisition of Spoof.com Limited. At 30 September 2006, there were 8,245,083 (2004: 9,164,000) unapproved share options under the Executive Share Option Scheme and 27,385,869 EMI share options. There were 18 million warrants in issue, exercisable at any time up to and including 27 May 2010 and further warrants in issue for 1 per cent of the issued share capital of the company at the time of exercise of the warrant exercisable at any time up to and including 4 August 2010. 9. Reconciliation of movement in shareholders' funds 6 months ended 17 months ended 30 Sept 2006 31 March 2006 £ £ Loss for the period (497,092) (5,925,141) Issue of shares 870,835 4,867,262 Premium on issue of shares 2,968,094 12,624,510 Finalisation of deferred consideration - (476,000) Minority Interest 21,379 - Currency translation difference 32,848 (69,746) -------- --------- Net increase in shareholders'funds 3,396,064 11,020,885 Opening shareholders' funds 11,136,691 115,806 -------- --------- Closing shareholders'funds 14,532,755 11,136,691 ======== ========= 10.Reconciliation of operating loss to operating cash flows 6 months ended 17 months ended 30 Sept 2006 31 March 2006 £ £ Operating loss (534,353) (3,847,497) Impairment of goodwill - 2,457,021 Depreciation 12,939 185,301 Amortisation of goodwill on acquisition 9,783 677,334 Decrease in debtors 75,401 1,314,051 Increase/(decrease) in creditors 577,158 (2,919,925) Exchange adjustment 49,312 (102,814) --------- --------- Net cash inflow/(outflow) from operating activities 190,240 (2,236,529) ========= ========= 11. Analysis of cash flows for headings netted in the cash flow statement At 30 Sept At 31 March 2006 2006 £ £ Returns on investments and servicing of finance Interest paid (493,771) (692,406) Interest paid on finance leases - (17,928) Interest received 3,112 99,704 --------- --------- (490,659) (610,630) --------- --------- Capital expenditure and financial investment Purchase of intangible assets - (161,446) Purchase of tangible assets (616) (30,467) Proceeds on the disposal of fixed assets - 171,431 --------- --------- (616) (20,482) --------- --------- Financing Capital element of finance lease payments (168,572) (28,141) Repayment of bank loan (73,571) (690,106) Repayment of loan notes (10,972,241) (2,700,509) Issue of ordinary share capital - 17,068,272 Issue of loans 17,305,000 12,205,966 --------- --------- 6,090,616 25,855,482 --------- -------- Acquisition Purchase of business (5,979,695) (23,115,000) --------- --------- (5,979,695) (23,115,000) --------- --------- 12. Reconciliation of net cash flow to movement in net debt At 30 Sept At 31 March 2006 2006 £ £ Increase in cash in the period 139,386 207,090 Repayment of loan notes 10,465,103 - Repayment of bank loan 68,578 699,301 Repayment of finance leases 113,977 44,161 Disposal of finance leases 15,153 - Increase in loans (17,305,000) (9,444,491) Exchange adjustments 44,439 (86,182) --------- --------- Movement in debt in the period (6,455,954) (8,580,121) Net debt at start of period (10,462,015) (1,881,894) --------- --------- Net debt at end of period (16,920,379) (10,462,015) ========= ========= 13. Analysis of net debt At 31 March Cash flow Decrease in Exchange At 30 Sept 2006 Debt Movement 2006 £ £ £ £ £ Cash at bank 634,250 139,386 - - 773,636 Bank loan (121,028) 68,578 - 4,998 (47,452) Convertible loan note (160,000) - - - (160,000) Finance (285,134) 113,977 15,153 39,441 (116,563) leases Loan notes (1,085,612) - 1,085,612 - - Other Loans (9,444,491) (7,925,509) - - (17,370,000) --------- --------- --------- --------- --------- (10,462,015) (7,601,158) 1,100,765 44,439 (16,920,379) ========= ========= ========= ========= ========= 14. Post balance sheet events There have been no post balance events. This Interim Report was approved by the Directors on 29 November 2006. The report will be sent to all registered shareholders and will be available to members of the public from the Company's registered office at Portland House, 4 Great Portland Street, London W1W 8QJ and online from the Company's corporate website at www.CMG-plc.com. This information is provided by RNS The company news service from the London Stock Exchange ND IR QKLFLQFBEFBQ

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