14 October 2016
Catalyst Media Group plc
("CMG" or the "Company")
Trading Update and Proposed Share Buy Back
CMG provides the following update in respect of Satellite Information Services (Holdings) Ltd ("SIS") in which it has an approximate 20.54 per cent. interest.
SIS has now finalised its results for the year ended 31 March 2016, which show revenues of £227.9 million (2015: £229.0 million) and profit after tax of £16.6 million (2015: £21.4 million). The profits were below the prior year due to a reduction in the customer 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 year ended 31 March 2016, net cash generated from operating activities increased significantly to £43.2 million (2015: £32.3 million), due mainly to working capital movements, and as at 31 March 2016, SIS had a substantially increased cash position of £62.2 million (2015: £21.9 million) prior to the payment of the dividend referred to below.
Given the strong cash position of SIS as set above, the progress it has made in signing new media rights and the continued positive cash flow generation of its operations, as announced on 29 July 2016, SIS approved a dividend of £20.0 million. Accordingly, the dividend received by CMG was £4.1 million. Since its year end, SIS is trading in line with management's expectations and continues to generate positive cash flow.
As previously reported various racing media, rights acquired from Arena Racing and from Northern Racing expire at the end of 2016 and 2017 but, 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. Meanwhile the board of SIS has been pursuing its growth initiatives to widen the base of the company in the digital streaming sector and on line gaming. This has involved direct investments of approximately £8.0 million as at 31 March 2016 and is ongoing.
The claim in respect of the Indian project referred to in previous statements continues to be pursued but it's outcome remains uncertain.
Taking account of CMG's share of SIS's profit for 2015 of £3.4 million, together with a one off charge to reflect accounting changes in SIS of £0.4 million and an impairment charge of £3.0 million, on the basis CMG's investment in SIS has been maintained at £25.0 million, CMG anticipates announcing a small loss for the year ended 30 June 2016. In assessing the value of the Company's investment in SIS, the Board takes into account the performance and prospects of SIS, which are in line with the Board's expectations and hence, in line with previous treatment, the Company has made an impairment charge equal to its profit share in order to maintain the value of its investment in SIS.
The final audited statements of CMG for the year ended 30 June 2016 are expected to be published on or before 20 December 2016.
CMG continues to trade with very low overheads at a net cost of approximately £112,000 per annum and accordingly, following the receipt of the dividend from SIS, the Board of CMG has now resolved to offer to purchase up to 3,411,704 ordinary shares of 10p each in CMG ("Ordinary Share") in accordance with the authority granted at the last Annual General Meeting of the Company. WH Ireland Limited has been engaged to undertake the share repurchase programme on the Company's behalf. In accordance with the authority granted, the maximum price which may be paid for an Ordinary Share is equal to 105 per cent. of the average of the middle market quotations for an Ordinary Share as derived from the AIM Appendix to The London Stock Exchange Daily Official List for the five business days immediately preceding the day on which such Ordinary Share is contracted to be purchased. The Company will not purchase Ordinary Shares at a price greater than 75p per share. This arrangement will expire on 11 November 2016. Those shareholders wishing to take advantage of this should contact their brokers or other financial advisers.
Enquiries:
Catalyst Media Group plc
Michael Rosenberg, Non-Executive Chairman +44 (0)7785 727 595
Melvin Lawson, Non-Executive Director +44 (0)20 7734 8111
Strand Hanson Limited +44 (0)20 7409 3494
James Harris
Richard Tulloch
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No 596/2014.
