Interim Results for Six Months Ended 31 Dec 2013

Catalyst Media Group Plc

("CMG", "Catalyst" or the "Group")

 

Interim Results for Six Months Ended 31 December 2013

 

Catalyst Media Group Plc announces its interim results for the six months ended 31 December 2013.

 

CMG is a 20.54% shareholder in Satellite 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 2013

·           CMG profit after taxation and before impairment charges of £2.2m (2012: £2.0m)

·           Impairment charge of £2.2m resulting in a loss after taxation of £7,770

·           Earnings per share (before impairment) 7.91p (2012: 7.18p)

·           Loss per share (after impairment) 0.03p

·           Net asset value per share of 103.5p (2012: 131.0p)

·           SIS revenues for 6 months to 30 September 2013 £138.6m (2012: £131.0m)

·           SIS EBITDA for 6 months to 30 September 2013 of £22.3m (2012: £25.0m)

·           SIS profit after tax on ordinary activities for the six months to 30 September 2013 of £10.7m (2012: £9.9m)

 

Michael Rosenberg, Chairman of Catalyst commented:

 

"The core business of SIS continues to perform in line with management expectations.  The closure of the outside broadcast division will impact the overall results for the year ending 31 March 2014 although the final costs of that closure are still to be determined. No dividends have been declared."

 

Enquiries:

 

Catalyst Media Group Plc:

Michael Rosenberg, Non-executive Chairman:      07785 727 595

Melvin Lawson, Non-executive Director:                020 7637 8412

 

Strand Hanson Limited:                                      020 7409 3494

James Harris

Richard Tulloch

Chairman's Statement

 

For the six month period ended 31 December 2013, the Group has generated a net profit after taxation before impairment charges of £2.2m (2012: £2.0m). After taking account of an impairment charge of £2.2m as detailed below, the Group recorded a loss of £7,770 for the period. Net assets as at 31 December 2013 were £28.6m (30 June 2013: £28.6m) equivalent to 103.5p per share.  Net cash at the period end was £571,596.

 

The main asset of the Group remains the 20.54% stake in SIS. CMG equity accounts for its share in the profits of SIS.

 

The revenues of SIS during the period included £90.6m derived from the long established business of providing integrated television and data services to licensed betting offices in the UK, Ireland and overseas. A further £48.0m was contributed by the business of SISLIVE which provides satellite news gathering and associated transmission services to its customers.

 

During the period under review, a decision was taken to cease the activities of the SIS Outside Broadcast Division following upon the termination of its contract with the BBC. The impact of this closure is still under review as the business is undergoing an orderly managed winding down.

 

As reported in the annual accounts of CMG for the year to 30 June 2013, the board of CMG decided that it would be prudent to reduce the carrying value of the investment in SIS in its books to £28.0m from its previous level of £35.6m. This decision reflects, inter alia, the loss of the BBC contract. Despite SIS's profitability which would have increased the Company's carrying value of the SIS investment, it has been decided to maintain the investment at a value of £28.0m as at 31 December 2013 and this will, as is standard, be reviewed again by the Board at the Company's financial year end. Accordingly, a further impairment of £2.2m has been accounted for in the CMG interim accounts which equals CMG's share of SIS's profits for the period.

 

The services to the betting industry are supported in the main by fixed term contracts with the retail owners of the betting shops and with the racecourses that enable pictures to be delivered to those shops. SIS now holds media rights for in excess of 50 per cent of horse racing fixtures from the UK and Ireland as well as dog track racing with rights expiring at various dates between now and 2018. SIS has acquired a stake in the Chelmsford City racecourse with a view to securing ongoing rights to all weather racing in the future. It is examining other initiatives to ensure continuity of the core business, as the termination dates of media rights draw closer, though none are under active discussion at this stage.

 

SISLIVE signed new contracts with ITV and ITN for the supply of satellite news gathering (SNG) services in November 2013. This new seven year agreement includes the provision of a highly specified fleet of 18 HD SNG vehicles, downlinks, IP systems and satellite capacity to facilitate ITV and ITN's satellite news gathering requirements in the UK.

 

In addition SISLIVE entered into a new four year agreement with Sky Sports News for the provision of satellite capacity for its news gathering services. It recently announced an agreement for the delivery of six new satellite news gathering vehicles to Sky News to deliver HD contribution feeds from breaking news events around the UK. SISLIVE now provides satellite news gathering capacity for every single news and sports news broadcaster in the UK.

 

Outlook

 

The business of SIS continues to be cash generative and profitable. However the board of SIS is aware that as the termination dates of the media rights draw closer it needs to focus on the most effective way to ensure continuity of the core business. The investment in the Chelmsford City racecourse is one step towards securing the future and other strategic initiatives are under discussion. At the same time it is aware that changes are occurring in the betting industry as new technologies emerge and there are signs that some shrinkage of the numbers of retail outlets may be occurring. Accordingly, no interim dividend has been declared by SIS and it is uncertain as to when dividends may resume since the aim of the Board of SIS is to conserve cash resources to enable it to embark on new initiatives as and when they may arise. As a consequence, CMG has not declared an interim dividend.

 

Meanwhile CMG now operates at a very low cost base and has adequate cash reserves for its needs for the foreseeable future.

 

Consolidated interim statement of comprehensive income

 

	Notes	6 months  to 31 December 2013   £ Unaudited	6 months to 31 December 2012   £ Unaudited	12 months to 30 June 2013     £ Audited
Revenue		12,500	12,500	25,000
Cost of sales		-	-	-
Gross profit / (loss)		12,500	12,500	25,000
Administrative expenses		(34,289)	(55,912)	(147,698)
Operating loss		(21,789)	(43,412)	(122,698)
Financial income		787	7,883	10,763
Financial costs	4	-	(294)	(20)
Net financial costs		787	7,589	10,743
Share of profit of equity-accounted associate	1	2,195,315	2,025,449	4,854,420
Impairment of equity-accounted associate		(2,195,315)	-	(8,400,767)
(Loss) /profit before taxation		(21,002)	1,989,626	(3,658,302)
Taxation		13,232	14,973	25,836
(Loss) / profit for the period		(7,770)	2,004,599	(3,632,466)
Share of other comprehensive income of associate		-	-	8,832
Total comprehensive (loss) / income for the period		(7,770)	2,004,599	(3,623,634)
Attributable to equity holders of the company		(7,770)	2,004,599	(3,623,634)
(Loss) / earnings per share:	5
Basic		(0.03p)	7.18p	(13.07p)
Diluted		(0.03p)	7.18p	(13.07p)