Catalyst Media Regulatory News (CMX)

5 Aug 2005 09:30

Catalyst Media Group PLC05 August 2005 5 August 2005 CATALYST MEDIA GROUP PLC (CMG) UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2005 Catalyst Media Group plc, the media company, today announces its unauditedinterim results for the six months ended 30 April 2005, which should be read inconjunction with the preliminary announcement of results for the financial yearended 31 October 2004 also announced today. OVERVIEW CMG is a media company that manages, produces and distributes high qualityaudio-visual content using interactive digital technology. CMG provides clientswith a comprehensive range of professional services to support their onlinestrategies and is becoming the partner of choice for media companies in thedigitisation and distribution of broadcast content and interactive programmecreation. Additionally, CMG supports corporations and organisations from otherindustrial sectors by enabling them to use streaming and download distributionto support communication with customers, investors and employees. Furthermore, CMG is a rights holder on its own account specialising in historicentertainment and educational content, generating revenues from the licensing ofcontent globally to third parties, from consumer subscriptions, pay-per-viewfees and from advertising revenue. FINANCIAL RESULTS The loss for the six month period ended 30 April 2005 was £1.43 million (EBITDA:loss £1.09 million) compared to a loss of £0.71 million (EBITDA: loss£0.45million) for the equivalent period in 2004. No dividend has been paid oris proposed. Global Media Services Inc (GMS) and NPG Inc. generated positive EBITDA for theperiod, and Newsplayer International Ltd broke even. Betelgeuse Productions Inc(BPI) made a small loss during the period, which was mainly due to the negativeimpact of the final Champ Car race in November 2004, and the significantrestructuring of that business. The EBITDA loss for the period of £1.09 millionis stated after group infrastructure costs of approximately £0.57 million.Management focus during the period drove these costs down to this level throughinitiation of cost savings of approximately £0.1 million. Management expectsthese cost savings to be approximately £0.37 million on an annualised basis andexpects to receive the full benefit of these by April 2006. OPERATIONAL HIGHLIGHTSGMS provides interactive digital video services to the North American motorsport industry. GMS has had success in developing the Race Director platformwhich delivers a whole new level of interaction and control to the motor sportfan. This work was rewarded by the recent renewal of the Internet productioncontract for the 2005 season and subsequent new business wins from three otherUS motor sport series. Meanwhile BPI has been re-structured and is focusing onits core strengths. We have made a sustained investment in our original US subsidiary, NPG Inc., todevelop Footage.net into a fully transactional platform. The new environment isexpected to go live in October 2005 and will provide stock footage archives andproduction researchers with the first comprehensive exchange through which tobuy and sell stock footage. In the UK we are seeing the genesis of a broadbandinfrastructure that will enable Internet Protocol Television to become realitywithin the next three years and thereby present an ideal opportunity to exploitthe intellectual property assets to which we have rights. We are seeing an increase in broadband content licensing activity and have begunto gain recognition in the US. We have recently won a distribution agreementwith Microsofts MSN Video in the US to provide a weekly package of topical clipsfrom across CMGs archives. CMG will earn a share of revenues from the streamedadvertising. In addition, I am pleased to announce that CMG has recently begundistributing Hollywood - related programming via broadband networks to TV in thehome following an arrangement with VOD Pty in Australia and will earn revenuefrom this distribution. CMG has also begun trials with Bell Canada, Canadas largest communicationsnetwork, to distribute a weekly package of topical clips to their users inreturn for a share of revenues from streamed advertising. ALTERNATEPORT After more than a year since we first announced our intention to buyAlternateport Limited, the company that owns 20 per cent. of SatelliteInformation Services (Holdings) Limited (SIS), from United Business Media plc,we have concluded negotiations to complete the transaction. Further informationon the SIS business is set out in the circular to shareholders accompanying theAnnual Report for the financial year ended 31 October 2004 (Annual Report). SISrepresents an important opportunity for CMG to apply our interactive technologyto the world of horseracing and betting. OUTLOOK The Group has weathered the storm caused by the difficulties in New York whichare discussed in detail in the Annual Report. It is now well placed to benefitfrom recent management initiatives and the anticipated dividend and profitcontribution from our investment in SIS. The future for CMG is very excitingand I look forward to reporting further progress. Paul Duffen Chief Executive Officer Unaudited results for the six months ended 30 April 2005Consolidated profit and loss accountFor the six months ended 30 April 2005 Note Six months Six months Year ended ended ended 30 April 2005 30 April 2004 31 Oct 2004 £ £ £ TurnoverContinuing operations 1 1,871,085 1,655,071 7,044,535 Cost of sales (1,278,610) (980,081) (6,843,917) ---------- ---------- ---------- Gross profit 592,475 674,990 200,618Operating expenses (2,046,139) (1,386,989) (3,359,608) ---------- ---------- ---------- Operating loss 2 (1,453,664) (711,999) (3,158,990)Impairment of goodwill - - (2,194,000)Interest receivable 74,843 7,912 29,195Interest payable (54,838) (5,796) (80,660) ---------- ---------- ---------- Loss on ordinaryactivities before taxation (1,433,659) (709,883) (5,404,455) Taxation (500) (500) (1,166) ---------- ---------- ---------- Loss on ordinaryactivities after taxation (1,434,159) (710,383) (5,405,621) ========== ========== ========== Loss per ordinary share 3 (0.82p) (0.56p) (4.02p) Statement of Total Recognised Gains and LossesFor the six months ended 30 April 2005 Six months Six months Year ended ended ended 30 April 2005 30 April 2004 31 Oct 2004 £ £ £Loss for the year (1,434,159) (710,383) (5,405,621) Currency translation difference 89,712 (36,458) 3,063 ---------- --------- ---------- Total recognised losses for theyear (1,344,447) (746,341) (5,402,558) ========== ========= ========== Consolidated Balance Sheet As at 30 April 2005 Note At At At 30 April 30 April 31 Oct 2005 2004 2004 £ £ £ Fixed assetsIntangible assets 4 4,984,238 8,350,070 5,255,822Tangible assets 259,672 254,733 258,216 ---------- ---------- --------- 5,243,910 8,604,803 5,514,038 Current assetsDebtors 5 2,103,431 2,057,932 1,744,291Cash at bank 6,519 1,356,073 427,160 ---------- ---------- --------- 2,109,950 3,414,005 2,171,451Creditors: amounts falling duewithin one year 6 (6,484,959) (4,146,286) (6,557,561) ---------- ---------- ---------Net current liabilities (4,375,009) (732,281) (4,386,110) ---------- ---------- --------- Total assets less currentliabilities 868,901 7,872,522 1,127,928 Creditors: amounts falling dueafter more than one year 7 (878,752) (2,559,860) (1,012,122) ---------- ---------- ---------Total net (liabilities)/assets (9,851) 5,312,662 115,806 ========== ========== ========= £ £ £Capital and reservesCalled up share capital 1,771,889 1,405,099 1,405,099Shares to be issued 476,000 1,012,640 476,000Share premium account 16,155,683 15,308,182 15,303,683Merger reserve 2,402,674 2,402,674 2,402,674Profit and loss account (20,816,097) (14,815,933) (19,471,650) --------- ---------- --------- Equity shareholders' funds 9 (9,851) 5,312,662 115,806 ========= ========== ========= Consolidated Cash Flow Statement For the six months ended 30 April 2005 Note Six months Six months Year ended ended ended 30 April 30 April 31 Oct 2005 2004 2004 £ £ £ Net cash outflow fromoperating activities 10 (1,557,911) (1,238,742) (2,087,355) Returns on investment andservicing of finance 20,005 6,917 (51,465) Taxation (500) (500) (1,166) Capital expenditure andfinancial investment (76,252) (9,992) (133,806) Acquisitions - (358,449) (141,911) --------- ---------- ---------Cash outflow beforefinancing (1,614,658) (1,600,766) (2,415,703) Financing 11 1,194,017 2,369,516 2,255,540 --------- ---------- ---------Increase/(decrease) in cash 13 (420,641) 768,750 (160,163) ========= ========== ========= Notes to the Accounts 1. Accounting policies and additional informationThese interim results for the six month period ended 30 April 2005 do notconstitute statutory accounts and have been neither reviewed nor audited by ourauditors. The financial information for the year ended 31 October 2004 isderived from the statutory accounts for that year. The auditors reported onthose accounts; their report was unqualified and did not contain a statementunder s237(2) or (3) Companies Act 1985. The accounting policies are consistent with those applied in the preparation ofthe statutory accounts for the year ended 31 October 2004. Basis of accountingThe financial statements are prepared under the historical cost convention. Going concernThe directors have prepared the financial statements on the basis that the Groupis a going concern as the forecasts the directors have prepared indicate thatthe company will have sufficient cash resources to satisfy liabilities as theyfall due. The forecasts assume that the proposed acquisition of AlternateportLimited and associated fund raising, which are conditional upon, inter alia, theapproval of shareholders in general meeting, are successfully concluded. TheCompany has secured, in aggregate, £28.75 million of new funding, of which £5.75million will be applied for working capital and to meet the expenses of thetransaction and £23 million for the consideration for the acquisition. Thedirectors are confident that the transactions will be completed and thereforehave prepared the financial statements on a going concern basis. If thefundraising is not successful the directors would need to raise further fundsfor the Group to continue as a going concern. The financial statements do notinclude any adjustments that would result if this going concern basis was notappropriate. Revenue recognition and turnoverRevenue is recognised under an exchange transaction with a customer, when, andto the extent that, the Group obtains the right to consideration in exchange forits performance. Turnover represents amounts derived from the provision of services which fallwithin the groups ordinary activities after deduction of trade discounts andvalue added tax. Those services include internet web design, televisionprogramme editing and production, website administration and revenues fromstreamed advertising. 2. Operating loss on ordinary activities before taxation Six months Six months Year ended ended ended 30 April 30 April 31 Oct 2005 2004 2004 £ £ £Operating loss is stated after charging:Amortisation of goodwill 297,489 213,593 510,702Depreciation 63,031 52,673 152,013 ---------- ---------- --------- 3. Loss per share The calculation of loss per share has been based on the loss after taxation forthe period of £1,434,159 and the weighted average number of ordinary shares inissue during the period of 174,437,369. The diluted loss per share calculation is identical to that used for basicearnings per share as the exercise of share options would have the effect ofreducing the loss per ordinary share and therefore is not dilutive under theterms of the Financial Reports Standard 14 Earnings per Share. 4. Intangible fixed assets Development Goodwill Intellectual Total Expenditure Property £ £ £ £CostAt 1 November2004 64,484 7,975,331 4,213,834 12,253,649Additions 30,467 - - 30,467Exchangeadjustments - (6,461) - (6,461) ---------- --------- --------- ---------At 30 April2005 94,951 7,968,870 4,213,834 12,277,655 ========== ========= ========= ========= AmortisationAt 1 November2004 - (2,783,993) (4,213,834) (6,997,827)Charge for the6 months - (297,489) - (297,489)Exchangeadjustments - 1,899 - 1,899 ---------- --------- --------- ---------At 30 April2005 - (3,079,583) (4,213,834) (7,293,417) ========== ========= ========= ========= Net book valueAt 30 April2005 94,951 4,889,287 - 4,984,238 ========== ========= ========= ========= At 31 October2004 64,484 5,191,338 - 5,255,822 ========== ========= ========= ========= 5. Debtors: At At 30 April 31 Oct 2005 2004 £ £Debtors: amounts falling due within one year 1,116,735 658,335Trade debtorsOther debtors 47,974 100,287Called up share capital not paid 10,500 10,500Prepayments and accrued income 913,746 930,648 ---------- --------- 2,088,955 1,699,770 ---------- ---------Debtors: amounts falling due after more than one year 14,476 44,521Other debtors ---------- --------- 2,103,431 1,744,291 ========== ========= 6. Creditors: amounts falling due within one year At At 30 April 2005 31 Oct £ 2004 £Bank loan 726,204 759,640Loan notes 391,890 387,138Obligations under finance leases 251,155 191,012Trade creditors 2,868,974 2,234,625Taxation and social security 1,500 238,657Other creditors 1,252,696 1,314,948Accruals and deferred income 992,540 1,431,541 --------- --------- 6,484,959 6,557,561 ========= ========= 7. Creditors: amounts falling due after more than one year At At 30 April 31 Oct 2005 2004 £ £Bank loan 41,540 51,494Loan notes 590,663 637,507Obligations under finance leases 43,854 122,263Convertible loan note 160,000 160,000Other creditors 42,695 40,858 --------- --------- 878,752 1,012,122 ========= ========= 8. Changes in share capitalIn May 2005 7,274,286 new ordinary shares of 1p were placed with institutionaland other investors at 3.5p p per share. In May 2005 5,600,000 new ordinary shares of 1p each were issued to Adam Cohen(2,856,000) and Jennifer Sultan (2,744,000), in finalisation of the arrangementsof the deferred consideration on the acquisition of GMS. In November 2004 15,000,000 new ordinary 1p shares were placed with GartmoreInvestment Management Limited at 5p per share. In November 2004 7,000,000 new ordinary 1p each were placed with Williams DeBroe at 5p per share. In December 2004 14,678,968 new shares of 1p each were issued to Champ Car WorldSeries LLC, based on closing price of 7.75p. 9. Reconciliation of movement in shareholders' funds Six months Six months Year ended ended ended 30 April 30 April 31 Oct 2005 2004 2004 £ £ £ Loss for the period (1,434,159) (710,383) (5,405,621)Issue of shares 366,790 2,723,465 2,718,966Premium on issue of shares (net of issuecosts) 852,000 1,106,998 1,106,998Currency translation difference 89,712 (36,458) 3,063Shares to be issued - - (536,640) ----------- ----------- ----------Net increase/(reduction) inshareholders' funds (125,657) 3,083,622 (2,113,234)Opening shareholders' funds 115,806 2,229,040 2,229,040 ----------- ----------- ----------Closing shareholders' funds (9,851) 5,312,662 115,806 =========== =========== ========== 10. Reconciliation of operating loss to operating cashflows Six months Six months Year ended ended ended 30 April 30 April 31 Oct 2005 2004 2004 £ £ £ Operating loss (1,453,664) (711,999) (5,352,990)Impairment of intellectual propertyrights - - 2,194,000Depreciation 63,031 52,673 152,013Amortisation of goodwill onacquisition 297,489 213,593 510,702Loss on disposal of fixed assets - 803Increase in debtors (359,140) (790,862) (478,873)(Decrease)/increase in creditors (102,224) 85,161 875,955Exchange adjustment (3,403) (87,308) 11,035 ----------- ------------ ----------Net cash outflow from operatingactivities (1,557,911) (1,238,742) (2,087,355) =========== ============ ========== 11. Analysis of cash flows for headings netted in the cash flow statement At At 30 April 31 Oct 2005 2004 £ £Returns on investments and servicing of financeInterest paid 74,843 29,195Interest paid on finance leases (12,169) (66,559)Interest received (42,669) (14,101) ---------- --------- 20,005 (51,465) ---------- ---------Capital expenditure and financial investmentPurchase of intangible assets (30,647) (73,811)Purchase of tangible assets (45,605) (59,995) ---------- --------- (76,252) (133,806) ---------- ---------FinancingCapital element of finance lease payments (8,028) (63,868)Repayment of bank loan (16,744) (263,318)Repayment of loan notes - (129,470)Issue of ordinary share capital 1,218,789 2,660,702Issue of bank loan - 51,494 ---------- --------- 1,194,017 2,255,540 ---------- --------- 12. Reconciliation of net cash flow to movement in net (debt)/funds At At 30 April 31 Oct 2005 2004 £ £Decrease in cash in the period (420,641) (160,163)Loans and finance leases acquired with subsidiary - (2,551,366)Repayment of loan notes - 129,470Repayment of bank loan 16,744 263,318Repayment of finance leases 8,028 63,868New bank loan - (51,924)Translation 78,976 (2,850) ---------- ---------Movement in debt in the period (316,893) (2,309,217)Net (debt)/funds at start of period (1,884,894) 427,323 ---------- ---------Net (debt) at end of period (2,198,787) (1,884,894) ========== ========= 13. Analysis of net (debt)/funds At 31 October Cash flow Acquired Exchange At 30 April 2004 Movement 2005 £ £ £ £ £ Cash at bank 427,160 (420,641) - - 6,519Bank loan (811,134) 16,744 - 26,646 (767,744)Convertibleloan note (160,000) - - (160,000)Finance leases (313,275) 8,028 - 10,238 (295,009)Loan notes (1,024,645) - - 42,092 (982,553) --------- --------- -------- -------- -------- (1,881,894) (395,869) - 78,976 (2,198,787) ========= ========= ======== ======== ======== 14. Post balance sheet eventsIn May 2005 the Group raised a £450,000 secured loan from Reef SecuritiesLimited (Reef), a company which is wholly owned by Steven Smith. The loan issecured by a charge over certain assets of the Catalyst Group. Reef has alsobeen issued with 18,000,000 warrants to subscribe for ordinary shares at 2.5pper share at any time prior to 27 May 2010 . This Interim Report was approved by the Directors on 4 August 2005. 15. The report will be sent to all registered shareholders and will beavailable to members of the public from the Company's registered office at 12Gough Square, London EC4A 3DW and online from the Company's corporate website atwww.CMG-plc.com. Enquiries: Paul Duffen, Chief ExecutiveCatalyst Media Group plc+44 20 7927 6699 This information is provided by RNS The company news service from the London Stock Exchange