Catalyst Media Regulatory News (CMX)

30 Jan 2006 09:19

Catalyst Media Group PLC30 January 2006 30 January 2006 CATALYST MEDIA GROUP PLC (CMG or the Company) UNAUDITED SECOND INTERIM RESULTS FOR THE TWELVE MONTHS ENDED 31 OCTOBER 2005 Catalyst Media Group plc, the media company, today announces its unauditedsecond interim results for the 12 months ended 31 October 2005. OVERVIEW CMG is a media company that manages and distributes high quality audio-visualcontent using interactive digital technology. Through its associated companies,CMG provides services to support clients online strategies and is a partner formedia companies in the digitalisation and distribution of broadcast content andinteractive programme creation. CMG supports corporations enabling them to usestreaming and download distribution to support communication with customers,investors and employees. CMG is also a rights holder on its own accountspecialising in historic entertainment and educational content, generatingrevenues from the licensing of content globally to third parties, from consumersubscriptions, pay-per-view fees and from advertising revenue. CMG also owns a 17.6% stake in Satellite Information Services (Holdings) Limited(SIS), the leading producer of sports content in the UK, providing over 9,700bookmakers with live television pictures, data display systems and otherbroadcast services. OPERATIONAL HIGHLIGHTS In September 2005 CMG completed the acquisition of a 20% stake in SIS throughthe acquisition of Alternateport Ltd from United Business Media plc (theAcquisition) for £23 million in cash. The Acquisition was made through CMG'ssubsidiary, Catalyst Media Holdings Ltd (CMH), which is owned 80% by CMG and 20%by Eureka Interactive Fund Limited (Eureka). At the time of the AcquisitionAlternateport owned 20% of SIS, giving CMG an effective 16% interest in SIS. In November 2005 SIS purchased 20,638 of its own shares from the RacecourseAssociation for a consideration of £10.7 million in cash. As a consequence,CMG's interest in SIS increased from 16% to 17.6% at no cost to CMG. In December 2005 SIS paid an interim dividend of £10 million. CMH's share ofthis dividend was £2.2 million which was applied to the early reduction of debtwhich was raised to part finance the Acquisition. The Acquisition was partly financed by the issuance of secured deep discountedBonds to Eureka for a subscription of £11.75 million. Whilst the Bonds have anominal value on maturity of £16.7 million they may be redeemed at any time at adeep discount which equates to an interest rate of 10% per annum. Consequently,following application of the funds from this dividend, the outstanding balancewas reduced from £12.1 million, including accrued interest, to £9.9 million. SIS has, in the recent past, had a policy of declaring a substantial dividendevery four years. The Directors of CMG expect the next dividend in line withthis policy to be declared before the end of 2006. Since the completion of the Acquisition, CMG has embarked on a strategy tode-risk and reduce costs in the Group so as to maximise the benefit toshareholders of its ownership in SIS. As part of this process Global MediaServices (GMS), the New York based media services business, was sold tomanagement in October 2005. As consideration CMG will receive 15 per cent. ofthe gross revenues of the holding company of GMS from 1 January 2006 to 31December 2010. In addition BPI, the wholly owned New York based televisionproduction company, entered into a joint venture with PowPix Productions whoassumed the responsibility for running the post production facility. As a resultof this agreement BPI's annual cost base has been reduced to less than £50,000from £1.1 million. CMG is currently in discussions with a number of interestedparties with regard to the disposal of its remaining US subsidiary, NPG Inc.,which operates the world's leading stock footage portal, Footage.net. In the UK a comprehensive re-structuring was implemented which has reducedoverheads by a further £500,000 annually. Consequently the Group now employs atotal of 6 people worldwide. The cost of the Group restructuring amounted to£1.1m, which will be included in the results for the period ending 31 March2006. Despite the significant reduction on the Groups cash resources andnotwithstanding the reduction in overhead the Group continues to generaterevenues from its on-going relationships with GMS, BPI and Footage.net as wellas its content licensing activities in the UK and its investment in SIS.I ampleased to report that the Group is now profitable at the EBITDA level on amonthly basis. FINANCIAL RESULTS CMG recorded a loss for the twelve month period ended 31 October 2005 of £7.3million (EBITDA: loss £2.3million) compared to a loss of £5.4 million (EBITDA:loss £4.7 million) for the equivalent period in 2004. The loss being reportedfor this period includes the goodwill write off in respect of GMS and BPI of£4.1million. Net assets increased to £11.6 million at the end of the period from£0.1 million in the prior year, primarily as a result of the acquisition of SIS.No dividend has been paid or is proposed. For the financial year ended 31 March 2005 SIS generated revenue of £117.7million (2004: £110.4 million) and profit before tax of £17.1million (2004:£14.9million). For the 12 months ended 31 October 2005 under Associateaccounting rules CMG recorded a two month net contribution from SIS of £500,000. CHANGE OF YEAR END Following completion of the SIS acquisition, the current financial year of CMGwas extended to 31 March 2006. CMG will publish its audited results for theseventeen month period ending 31 March 2006 by 30 September 2006. OUTLOOK The acquisition of a significant stake in SIS is a very positive development forthe Group which, combined with the subsequent extensive re-structuring, offersexcellent prospects for the future. The outstanding debt in respect of thisinvestment should be substantially reduced over the next 12 months from thedividends which the Directors expect to be paid. This will result in both asignificant increase in net assets of the Group and in its future earnings. Paul Duffen Chief Executive Officer Enquiries:Paul Duffen, Chief ExecutiveCatalyst Media Group plc+44 20 7927 6699 Unaudited results for the year ended 31 October 2005Consolidated profit and loss accountFor the twelve months ended 31 October 2005 Note 12 months Six months Year ended ended ended 31 Oct 2005 30 April 2005 31 Oct 2004 £ £ £ TurnoverExisting operations 1 224,786 106,363 794,623Discontinued operations 2,414,354 1,764,722 6,249,912 ---------- ---------- ---------- 2,639,140 1,871,085 7,044,535 Cost of sales (2,176,576) (1,278,610) (6,843,917) ---------- ---------- ---------- Gross profit 462,564 592,475 200,618Operating expenses (4,165,246) (2,046,139) (3,359,608) ---------- ---------- ---------- Operating loss 2Existing operations (3,130,077) (1,346,424) (1,870,208)Discontinued operations (572,605) (107,240) (1,288,782) ---------- ---------- ---------- (3,702,682) (1,453,664) (3,158,990) Impairment of goodwill (4,093,016) - (2,194,000)Share of associatesoperating profit 592,167 ---------- ---------- ----------Profit on ordinaryactivities before financecharges (7,203,531) (1,453,664) (5,352,990) Interest receivable 93,452 74,843 29,195Interest payable (282,507) (54,838) (80,660) ---------- ---------- ---------- Loss on ordinary activitiesbefore taxation (7,392,586) (1,433,659) (5,404,455) Taxation 151,999 (500) (1,166) ---------- ---------- ---------- Loss on ordinary activitiesafter taxation (7,240,587) (1,434,159) (5,405,621) ========== ========== ==========Minority Interests (68,793) - -Profit for the financialyear (7,309,380) (1,434,159) (5,405,621) ========== ========== ========== Loss per ordinary share 3 (3.85p) (0.82p) (4.02p) Statement of Total Recognised Gains and LossesFor the 12 months ended 31 October 2005 12 months Six months Year ended ended ended 31 October 30 April 2005 31 Oct 2004 £ £ £Loss for the year (7,309,380) (1,434,159) (5,405,621) Currency translationdifference (165,822) 89,712 3,063 ---------- --------- ---------- Total recognisedlosses for the year (7,475,202) (1,344,447) (5,402,558) ========== ========= ========== Consolidated Balance SheetAs at 31 October 2005 Note At At At 31 October 30 April 31 Oct 2005 2005 2004 £ £ £ Fixed assetsIntangible assets 4 10,486,394 4,984,238 5,255,822Tangible assets 283,872 259,672 258,216Investments 16,393,443 - - ---------- ---------- --------- 27,163,709 5,243,910 5,514,038 Current assetsDebtors 5 1,655,547 2,103,431 1,744,291Cash at bank 630,048 6,519 427,160 ---------- ---------- --------- 2,285,595 2,109,950 2,171,451Creditors: amounts falling duewithin one year 6 (5,103,990) (6,484,959) (6,557,561) ---------- ---------- ---------Net current liabilities (2,818,395) (4,375,009) (4,386,110) ---------- ---------- --------- Total assets less currentliabilities 24,345,314 868,901 1,127,928 Creditors: amounts falling dueafter more than one year 7 (12,710,447) (878,752) (1,012,122) ---------- ---------- ---------Total net (liabilities)/assets 11,634,867 (9,851) 115,806 ========== ========== ========= £ £ £Capital and reservesCalled up share capital 6,272,361 1,771,889 1,405,099Shares to be issued - 476,000 476,000Share premium account 29,906,684 16,155,683 15,303,683Merger reserve 2,402,674 2,402,674 2,402,674 --------- ---------- ---------Profit and loss account (26,878,059) (20,816,097) (19,471,650)Minority Interest' (68,793) --------- ---------- --------- Equity shareholders' funds 9 11,634,867 (9,851) 115,806 ========= ========== ========= Consolidated Cash Flow StatementFor the 12 months ended 31 October 2005 Note 12 months Six months Year ended ended ended 31 Oct 2005 30 April 2004 31 Oct 2004 £ £ £Net cashoutflow fromoperatingactivities 10 (3,289,643) (1,557,911) (2,087,355) Returns oninvestment andservicing offinance 11 (189,054) 20,005 (51,465) Taxation 151,999 (500) (1,166) Capitalexpenditure andfinancialinvestment 11 (184,076) (76,252) (133,806) Acquisitions (26,430,901) - (141,911) --------- ---------- ---------Cash outflowbeforefinancing (29,941,675) (1,614,658) (2,415,703) Financing 11 30,144,563 1,194,017 2,255,540 --------- ---------- ---------Increase/(decrease) in cash 13 202,888 (420,641) (160,163) ========= ========== ========= Notes to the Accounts 1. Accounting policies and additional information These interim results for the 12 months ended 31 October 2005 do not constitutestatutory accounts and have been neither reviewed nor audited by our auditors.The financial information for the 12 months ended 31 October 2004 is derivedfrom the statutory accounts for that year. The auditors reported on thoseaccounts; their report was unqualified and did not contain a statement unders237(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. During the year, the company acquired Alternateport Limited whose single assetwas 20% stake in Satellite Information Services (Holdings) Limited.Alternateport Limited is a 100% subsidiary of Catalyst Media Holdings Limitedwhich is 80% owned by CMG and 20% owned by Eureka Interactive Fund Limited.Catalyst Media Holdings Limited is accounted for under Subsidiary accountingrules and Eurekas minority interest is shown separately on the face of theProfit and Loss statement. Alternateport Limited is accounted for underAssociate accounting rules, where its attributable profits are included in theProfit and Loss statement, and shown as an investment on the Balance sheet. The directors have prepared the financial statements on the basis that the Groupis a going concern. 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 12 months Six months Year ended ended ended 31 Oct 30 April 31 Oct 2005 2005 2004 £ £ £Operating loss is stated after charging: Amortisation of goodwill 706,555 297,489 510,702Depreciation 139,151 63,031 152,013 ---------- ---------- --------- 3. Loss per share The calculation of loss per share has been based on the loss after taxation forthe period of £7,309,380 and the weighted average number of ordinary shares inissue during the period of 488,640,167. 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 £ £ £ £Cost At 1 November2004 64,484 7,975,331 4,213,834 12,253,649Additions 30,467 10,037,458 - 10,067,925Write downcontingentrevaluation (42,000) (42,000)Exchangeadjustments - 7,103 - 7,103 ---------- --------- --------- ---------At 31 October2005 94,951 17,977,892 4,213,834 22,286,677 ========== ========= ========= ========= Amortisation At 1 November2004 - (2,783,993) (4,213,834) (6,997,827)Charge for the6 months (60,000) (646,555) - (706,555) ---------- --------- --------- ---------Impairment - (4,093,016) - (4,093,016)Exchangeadjustments (2,885) (2,885) ---------- --------- --------- ---------At 31 October2005 (60,000) (7,526,449) (4,213,834) (11,800,283) ========== ========= ========= ========= Net book valueAt 31 October2005 34,951 10,451,443 - 10,486,394 ========== ========= ========= ========= At 31 October2004 64,484 5,191,338 - 5,255,822 ========== ========= ========= ========= 5. Debtors: At At 31 Oct 31 Oct 2005 2004 £ £Debtors: amounts falling due within one year 987,883 658,335Trade debtorsOther debtors 502,071 144,808Called up share capital not paid 1,000 10,500Prepayments and accrued income 164,593 930,648 ---------- --------- 1,655,547 1,744,291 ========== ========= 6. Creditors: amounts falling due within one year At At 31 Oct 31 Oct 2005 2004 £ £Bank loan 201,500 759,640Loan notes 391,890 387,138Obligations under finance leases 263,550 191,012Trade creditors 2,660,969 2,234,625Taxation and social security 60,236 238,657Other creditors 654,004 1,314,948Accruals and deferred income 871,841 1,431,541 --------- --------- 5,103,990 6,557,561 ========= ========= 7. Creditors: amounts falling due after more than one year At At 31 Oct 31 Oct 2005 2004 £ £Bank loan 33,710 51,494Loan notes 12,422,597 637,507Obligations under finance leases 49,869 122,263Convertible loan note 160,000 160,000Other creditors 44,271 40,858 --------- --------- 12,710,447 1,012,122 ========= =========8. Changes in share capital In September 2005, 3,055,555 new ordinary shares of 1p were issued to ParadineProductions, a company owned by Sir David Frost OBE at 4p per share. In September 2005, 425,000,000 new ordinary shares of 1p were placed withinstitutional and other investors at 4p per share, in order to finance theacquisition of Alternateport Limited, whose sole asset is its 20% holding inSIS. The holding increased to 22.05% in November 2005 after the share buy backby SIS. In September 2005, 8,750,000 new ordinary shares of 1p were issued to StrandPartners at 4p per share in part consideration of their professional fees forthe acquisition of SIS. In July 2005, 367,404 new ordinary shares of 1p were issued to Entendre insettlement of a legal claim based on a closing price of 7.75p. In May 2005 7,274,286 new ordinary shares of 1p were placed with institutionaland other investors at 3.5p per share. In May 2005 5,600,000 new ordinary shares of 1p were issued to Adam Cohen(2,856,000) and Jennifer Sultan (2,744,000), in full and final settlement of alldeferred consideration on the acquisition of GMS. In November 2004 15,000,000 new ordinary shares of 1p were placed with GartmoreInvestment Management Limited at 5p per share. In November 2004 7,000,000 new ordinary shares of 1p were placed with WilliamsDe Broe at 5p per share. In December 2004 14,678,968 new ordinary shares of 1p were issued to Champ CarWorld Series LLC, based on closing price of 7.75p. 9. Reconciliation of movement in shareholders' funds 12 months Six months Year ended ended ended 31 Oct 30 April 31 Oct 2005 2005 2004 £ £ £ Loss for the period (7,309,380) (1,434,159) (5,405,621)Issue of shares 4,867,262 366,790 2,718,966Premium on issue of shares (net ofissue costs) 14,603,001 852,000 1,106,998Currency translation difference (165,822) 89,712 3,063Shares to be issued (476,000) - (536,640) ----------- ----------- ----------Net increase/(reduction) inshareholders' funds 11,519,061 (125,657) (2,113,234)Opening shareholders' funds 115,806 115,806 2,229,040 ----------- ----------- ----------Closing shareholders' funds 11,634,867 (9,851) 115,806 =========== =========== ========== 10. Reconciliation of operating loss to operating cashflows 12 months Six months Year ended ended ended 31 Oct 30 April 31 Oct 2005 2005 2004 £ £ £ Operating loss (3,702,682) (1,453,664) (5,352,990)Impairment of intellectual propertyrights - - 2,194,000Depreciation 139,151 63,031 152,013Amortisation of goodwill onacquisition 706,555 297,489 510,702Loss on disposal of fixed assets 803(Decrease)/Increase in debtors 680,910 (359,140) (478,873)(Decrease)/increase in creditors (1,015,551) (102,224) 875,955Exchange adjustment (98,026) (3,403) 11,035 ----------- ------------ ----------Net cash outflow from operatingactivities (3,289,643) (1,557,911) (2,087,355) =========== ============ ========== 11. Analysis of cash flows for headings netted in the cash flow statement At At 31 Oct 31 Oct 2005 2004 £ £Returns on investments and servicing of financeInterest paid (220,690) 29,195Interest paid on finance leases (61,816) (66,559)Interest received 93,452 (14,101) ---------- --------- (189,054) (51,465) ---------- ---------Capital expenditure and financial investmentPurchase of intangible assets (30,467) (73,811)Purchase of tangible assets (158,811) (59,995)Disposal of fixed assets 5,202 ---------- --------- (184,076) (133,806) ---------- ---------FinancingCapital element of finance lease payments (58,233) (63,868)Repayment of bank loan (583,467) (263,318)Repayment of loan notes - (129,470)Issue of ordinary share capital 19,036,263 2,660,702Issue of bank loan - 51,494Issue of loan 11,750,000 - ---------- --------- 30,144,563 2,255,540 ---------- --------- 12. Reconciliation of net cash flow to movement in net (debt)/funds At At 31 Oct 31 Oct 2005 2004 £ £Decrease in cash in the period 202,888 (160,163)Loans and finance leases acquired with subsidiary - (2,551,366)Repayment of loan notes - 129,470Repayment of bank loan 585,470 263,318Repayment of finance leases 58,233 63,868New bank loan - (51,924)Loan note issue (11,750,000) -Translation (77,493) (2,850) ---------- ---------Movement in debt in the period (10,980,902) (2,309,217)Net (debt)/funds at start of period (1,881,894) 427,323 ---------- ---------Net (debt) at end of period (12,862,796) (1,884,894) ========== ========= 13. Analysis of net (debt)/funds At 31 Oct Cash flow Acquired Exchange At 31 Oct 2004 Movement 2005 £ £ £ £ £ Cash at bank 427,160 202,888 630,048Bank loan (811,134) 585,470 (9,545) (235,209)Convertibleloan note (160,000) (160,000)Finance leases (313,275) 58,233 (35,829) (290,871)Loan - (11,750,000) (11,750,000)Loan notes (1,024,645) (32,119) (1,056,764) --------- --------- -------- -------- --------- (1,881,894) (10,903,409) 0 (77,493) (12,862,796) ========= ========= ======== ======== ========= 14. Post balance sheet events In November 2005, SIS bought back shares from the Race Course Association, whichled to CMGs stake in SIS increasing to 17.6% from 16%. SIS also declared a £10million dividend of which CMH received £2.205 million. These monies have beenused to pay down part of the £11.75 million debt. In December 2005, BPI entered into a joint venture with PowPix Productions whoassumed the responsibility for running the post production facility. As a resultof this agreement BPI's annual cost base was reduced to less than £50,000 from£1.1 million This Interim Report was approved by the Directors on 26th January 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. This information is provided by RNS The company news service from the London Stock Exchange