Catalyst Media Regulatory News (CMX)

13 Dec 2007 16:13

Catalyst Media Group PLC13 December 2007 Catalyst Media Group plc ("CMG" or "the Company") Interim results for the period ended 30 September 2007 Chairman's Statement OVERVIEW At 30 September 2007, CMG continued to own a 20.54% stake in SatelliteInformation Services (Holdings) Limited ("SIS"), the leading producer of video,audio and data to over 9,700 licensed betting offices in the UK and Ireland. SISis also the leading satellite uplink contractor in Europe, providing link unitsto a variety of clients including television news companies and sports eventorganisers. In addition CMG is developing a suite of on-line games which itintends to bring to market in the near future. During the six month period underreview it has reduced levels of borrowings and successfully refinanced thebalance. Central costs have continued to be reduced. OPERATIONAL HIGHLIGHTS BORROWINGS On 10 April 2007, CMG raised £10 million (after expenses) via a Placing and OpenOffer at 0.5p per share and borrowed £3.5 million from North Atlantic SmallerCompanies Investment Trust ("NASCIT"). On 24 August 2007 CMG borrowed a further£3.91million from National Westminster Bank plc to repay in full the debt thatthe Company had in place with Investec Bank (UK) Limited. As at 30 September2007, the Company's borrowings were approximately £7.5 million. DISPOSALS On 27 April 2007, CMG completed the sale of NPG Inc, the Company's US-basedon-line portal for sourcing stock footage from multiple libraries. The oneremaining asset held by the Company in the USA is the entitlement to royaltieson income from Global Media Services Inc until 31 December 2009 which hascontinued to perform ahead of management expectation. SETTLEMENT On 7th August 2007, the Company settled a claim by Champ Car World Series LLP("Champ Car") against the Company for US$400,000 which was provided for in thefinancial year ended 31 March 2007. GAMES CMG continues the development of the on-line gaming platform together with asuite of fixed odds and head to head games. In the Annual Report to 31 March2007, the Company announced that these games were entering their testing andpre-marketing phase. Good progress in this phase has now been made and theCompany expects to launch in early 2008. SIS SIS continues to perform ahead of CMG's expectations. On 20 August 2007 SIS paid a £10 million dividend in respect of the retainedearnings brought forward balance as at 31 March 2007 and resulted in a £2.05million contribution to CMG. These monies were used to reduce a proportion ofthe then outstanding debt with Investec. There has been significant publicity in relation to the new competition faced bySIS arising from a joint venture between Alphameric plc and 31 of the 59 Britishracecourses (known as Amalgamated Racing Limited, or Amrac) who have formed anew television service known as Turf TV to supply pictures to betting shops.Turf TV has been established to challenge SIS's pre-eminent position as thesupplier of racing content to bookmakers. There has also been significantpublicity about a High Court action that has been brought by a bookmakers'organisation and a number of individual bookmakers against Amrac. Along with itsdefence, Amrac issued a counterclaim against the bookmakers, including SIS. SIShas in turn issued a defence, and its own counterclaim against Amrac. SIS's other main business division known as SISLink is not affected by Amrac andaccounts for over 30% of the profitability of the SIS Group. The SISLinkbusiness is Europe's largest independent satellite uplink provider. Among itsmore recently reported successes was the award of a contract in April 2007 tosupply Sky News and Five News with satellite services, which involve deliveringSky News a fleet of highly specified uplink vehicles and providing satelliteservices until 2012. As reported in Catalyst's Annual Report to 31 March 2007, SIS has significantlong term contracts in place with its customers and suppliers which underpin itsrevenues and CMG believes that there is no reason to revise its expectations forthe SIS results to 31 March 2008 at this time. FINANCIAL RESULTS As an AIM-listed company, the Group is required to adopt International FinancialReporting Standards (IFRS) with effect for periods beginning on or after 1January 2007. The first financial information to be reported by the Group in accordance withIFRS will be for the six months to 30 September 2007, but the requirement topresent comparative information means that a balance sheet prepared inaccordance with IFRS at 30 September 2006 is required. This announcement includes the consolidated results of the Group converted froma UK Generally Accepted Accounting Practices (UK GAAP) basis to an IFRS basisfor the period to 30 September 2007, the year to 31 March 2007, and balancesheets as at 30 September 2006, as at 31 March 2007 and as at 30 September 2007. This document explains the significant accounting policy changes from theaccounting policies adopted under UK GAAP for the year ended 31 December 2006. The Company recorded a loss for the six month period ended 30 September 2007 of£0.1 million (compared to a loss of £0.5 million for the six month to 30September 2006). This reflects the Board's on-going commitment to de-risk thebusiness and reduce costs. As a result of CMG accounting for SIS as an associateit is reporting a 20.54% share of SIS retained profit for the periodrepresenting income of £1.3 million in the Company's income statement which isnet of the IFRS adjustment for amortisation of £0.4 million. At the Company's AGM held on 25 October 2007 a special resolution was passed toconsolidate the Company's ordinary shares on a 100 for 1 basis to createordinary shares of 10p each thus reducing the number of ordinary shares in issuefrom 2.81 billion to a more manageable 28.1 million. The name of the Company will no longer be changed from Catalyst Media Group plcto CMG plc due to there being an existing trading company with a name which isconsidered too similar to this name. The Company will however continue to tradeas CMG. No dividend has been paid or is proposed by the Company. OUTLOOK The board is focused on reducing central costs to the minimum practicable and inthe light of the declared dividend policy of SIS it hopes to further reduce debtover the next 12 months. The debt is now significantly lower following thecorporate structuring that has taken place during the year. At 30 September2007, the Company's borrowings are now approximately £7.5 million compared to£17.3 million at 30 September 2006, net debt is £6.3 million and normalisedoperational overhead costs on an annualised basis are now running at less than£0.6 million per annum compared to more than £1 million per annum for the prioryear to 31 March 2007. Michael Rosenberg O.B.E. CHAIRMAN Enquiries: Michael Rosenberg O.B.E, Chairman Anna Prestwich, Chief Finance Officer Catalyst Media Group plc +44 20 7927 6699 Consolidated interim income statement 6 months to 6 months to 30 Year to 30 September September 2006 31 March 2007 2007 £ £ £ (Audited and (unaudited) (unaudited) restated)Revenue 92,730 138,949 283,818Cost of sales (1,936) (11,695) (16,674) --------- --------- ---------Gross profit 90,794 127,254 267,144Other income 1,393 - 151,705Administrative costs (303,089) (651,775) (3,886,203) --------- --------- ---------Operating loss (210,902) (524,521) (3,467,354) Finance income 35,309 3,112 7,666Finance costs (1,544,336) (493,771) (2,129,972) --------- --------- ---------Net finance cost (1,509,027) (490,659) (2,122,306) Share of profit from associates 1,299,974 - 1,307,692 --------- --------- ---------Loss before tax (419,955) (1,015,180) (4,281,968)Income tax credit 275,009 329,500 1,010,757 --------- --------- ---------Loss for the period (144,946) (685,680) (3,271,211) ========= ========= =========Attributable to:Equity holders of the parent (144,946) (685,680) (3,271,211)Minority interest - 198,371 198,371 --------- --------- --------- (144,946) (487,309) (3,072,840) ========= ========= =========Earnings per share: Basic and diluted 3 (0.53p) (7.1p) (45p) ========= ========= ========= Consolidated interim balance sheet 30 September 30 September 31 March 2007 2006 2007 £ £ £ (Audited and (unaudited) (unaudited) restated)ASSETSNon-current assetsProperty, plant and equipment 2,797 68,636 54,893 Goodwill - 1,077,561 104,710Other intangible assets 230,350 2,162,845 230,350Investments in associates 27,395,137 29,082,137 28,148,848 --------- --------- --------- 27,628,284 32,391,179 28,538,801 --------- --------- ---------Current assetsTrade and other receivables 575,833 414,908 1,401,669Cash and cash equivalents 1,225,884 773,636 1,948,586 --------- --------- --------- - 1,801,717 1,188,544 3,350,255 --------- --------- ---------Total assets 29,430,001 33,579,723 31,889,056 ========= ========= =========LIABILITIESCurrent liabilitiesTrade and other payables 564,052 1,732,185 1,848,429Current portion of long-term borrowings - - 160,000 --------- --------- --------- 564,052 1,732,185 2,008,429 --------- --------- --------- Non-current liabilitiesLong-term borrowings 7,119,749 17,305,000 17,305,000Other non-current liabilities - - 704,390 --------- --------- ---------Total non-current liabilities 7,119,749 17,305,000 18,009,390 --------- --------- ---------Total liabilities 7,683,801 19,037,185 20,017,819 --------- --------- ---------Net assets 21,746,200 14,542,538 11,871,237 ========= ========= =========EQUITYEquity attributable to equity holders of the parent Share capital 9,243,196 7,143,197 7,143,197Share options reserve 380,609 472,446 388,526Share premium account 38,904,457 30,896,287 30,896,287Merger reserve 2,402,674 2,402,674 2,402,674Profit and loss account (29,215,734) (26,404,914) (28,990,445)Translation reserve 30,998 32,848 30,998 --------- --------- ---------Total equity 21,746,200 14,542,538 11,871,237 ========= ========= ========= Consolidated interim statement of recognised income and expense 6 months to 6 months to 30 Year to 30 September September 2006 31 March 2007 2007 £ £ £ (Audited and (unaudited) (unaudited) restated) Exchange differences on translation foreign operations - 32,848 30,998 ---------- --------- ---------Net income/(expense) recognised directly in equity - 32,848 30,998Loss for the period (144,946) (487,309) (3,072,840) ---------- --------- ---------Total recognised income and expense for the period (144,946) (454,461) 3,041,842) ========== ========= =========Attributable to: Equity holders of the parent (114,946) (652,832) (3,240,213)Minority interest - 198,371 198,371 ---------- --------- --------- (144,946) (454,461) (3,041,842) ========== ========= ========= Consolidated interim cash flow statement 6 months to 6 months to 30 Year to 30 September September 2006 31 March 2007 2007 £ £ £ (Audited and (unaudited) (unaudited) restated) Cash flows from operating activities Loss after taxation (144,946) (685,680) (3,271,211)Adjustments for:Depreciation, amortisation and impairment 394,898 12,939 1,863,581Taxation credit recognised in the income statement (275,009) (329,500) (1,010,757)Share of profits in associates (1,299,974) - (1,307,692)Profit on sale of subsidiary and interest in associate (1,393) - (151,705)Interest expense 1,544,336 3,771 2,129,972Increase/(decrease) in trade receivables 362,053 72,289 (919,025)(Decrease)/increase in trade payables (2,249,617) 626,421 1,307,398 ---------- --------- ---------Cash generated from operations (1,669,652) 190,240 (1,359,439) Interest received 35,309 3,112 7,666Interest paid (1,544,336) (493,771) (2,129,972)Corporation taxes recovered 275,009 329,500 1,010,758 ---------- --------- ---------Net cash from (used in) operating activities (2,903,670) 29,081 (2,470,987) ---------- --------- ---------Cash flows from investing activities Disposal of subsidiary 82,029 - -Investment in associates - (5,979,695) (3,742,926)Dividends received from associates 2,053,685 -Purchase of property, plant and equipment - (616) (951,982) ---------- --------- ---------Net cash from (used in) investing activities 2,135,714 (5,980,311) (4,694,908) ---------- --------- --------- Cash flows from financing activities Proceeds from issue of share capital 10,100,254 - 2,618,634Proceeds from long-term borrowings 7,410,000 17,305,000 17,305,000Payment of long-term borrowings (17,465,000) (11,214,384) (11,443,403) ---------- --------- ---------Net cash from financing activities 42,254 6,090,616 8,480,231 ---------- --------- --------- Net increase/(decrease) in cash and cash equivalents (772,702) 139,386 1,314,336Cash and cash equivalents at beginning of period 1,948,586 634,250 634,250 ---------- --------- ---------Cash and cash equivalents at end of period 1,225,884 773,636 1,948,586 ========== ========= ========= Notes to the consolidated interim financial statements 1 General information Catalyst Media Group plc is the Group's ultimate parent company. It isincorporated and domiciled in Great Britain. The registered address of CatalystMedia Group plc is Portland House, 4 Great Portland Street, London W1W 8QJ. Itsshares are listed on the AIM market of the London Stock Exchange. These consolidated interim financial statements have been approved for issue bythe Board of Directors on 10 December 2007. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 March 2007,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain any statements under Section 237(2) of the Companies Act 1985. 2 Basis of preparation These consolidated interim financial statements are for the six months ended30 September 2007. They have been prepared in accordance with the requirementsof IFRS 1 "First-time Adoption of International Financial Reporting Standards"relevant to interim reports, because they are part of the period covered by theGroup's first IFRS financial statements for the year ended 31 March 2008. Theydo not include all of the information required for full annual financialstatements, and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 31 March 2007. These financial statements have been prepared under the historical costconvention, except for revaluation of certain financial instruments. These consolidated interim financial statements are presented in Pounds Sterling(£), which is also the functional currency of the parent company. These consolidated interim financial statements have been prepared in accordancewith the accounting policies which are based on the recognition and measurementprinciples of IFRS in issue as adopted by the European Union (EU) and areeffective at 31 December 2007 or are expected to be adopted and effective at31 December 2007, our first annual reporting date at which we are required touse IFRS accounting standards adopted by the EU. Catalyst Media Group plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 March 2007. The date of transition toIFRS was 1 April 2006. The comparative figures in respect of 2006 have beenrestated to reflect changes in accounting policies as a result of adoption ofIFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAPto IFRS are given in the reconciliation schedules, presented and explained innote 5. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these consolidated interim financial statements.The Group's revised accounting polices under IFRS will be published in full inthe financial statements for the year ending 31 March 2008. 3 Earnings per share Basic and diluted earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the average number of shares inissue during the year. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. 6 months to 6 months to 30 Year to 30 September September 2006 31 March 2007 2007 £ £ £ (Audited and (unaudited) (unaudited) restated)Loss after tax (144,946) (487,309) (3,072,840)Weighted average number of shares 27,093,197 6,862,178 6,862,178Basic and diluted earnings per share (pence) (0.53p) (7.1p) (45p) On 25 October 2007 a special resolution was passed at the AGM to consolidateordinary shares on a 100 for 1 basis reducing the number of ordinary shares inissue from 2.81 billion to a 28.1 million. The above calculation of earnings pershare reflects the consolidation and all reported periods have been adjusted asif this consolidation had occurred at the beginning of the earliest reportedperiod. 4 Dividends The directors do not propose the payment of a dividend for the period. 5 Explanation of transition to IFRS As stated in the Basis of Preparation, these are the Group's first consolidatedinterim financial statements for part of the period covered by the first IFRSannual consolidated financial statements which will be prepared in accordancewith IFRS. An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemptions: • business combinations prior to 1 April 2006, the Group's date oftransition to IFRS, have not been restated to comply with IFRS 3 "BusinessCombinations". Goodwill arising from these business combinations of £117,352 hasnot been restated; and • cumulative translation differences on foreign operations are deemedto be nil at 1 April 2006. Any gains and losses recognised in the consolidatedincome statement on subsequent disposal of foreign operations will excludetranslation differences arising prior to the transition date. Reconciliation of equity at 1 April 2006 Adjustment UK GAAP a IFRS £ £ £Non-current assetsProperty, plant and equipment 89,367 - 89,367Goodwill 3,067,352 (2,950,000) 117,352Other financial assets 22,193,670 2,950,000 25,143,670Current assetsTrade and other receivables 472,438 - 472,438Cash and cash equivalents 634,250 - 634,250Current liabilitiesTrade and other payables (4,022,475) - (4,022,475)Non-current liabilitiesLong-term borrowings (9,049,491) - (9,049,491) --------- --------- --------- Net assets 13,385,111 - 13,385,111 ========= ========= =========EquityShare capital 6,272,361 - 6,272,361Share premium account 27,928,193 - 27,928,193Merger reserve 2,402,674 - 2,402,674Profit and loss account (25,938,983) - (25,938,983)Shares to be issued 472,446 472,446 --------- --------- ---------Total equity 11,136,691 - 11,136,691 ========= ========= =========Minority interest 2,248,420 2,248,420 --------- --------- --------- 13,385,111 13,385,111 ========= ========= ========= Reconciliation of equity at 30 September 2006 Adjustments UK GAAP a b IFRS £ £ £ £Non-current assetsProperty, plant and equipment 68,636 - - 68,636Goodwill 7,909,915 (6,842,137) 9,783 1,077,561Other intangible assets 2,162,845 - - 2,162,845Investments in associates 22,240,000 6,842,137 - 29,082,137Current assetsTrade and other receivables 414,908 - - 414,908Cash and cash equivalents 773,636 - - 773,636Current liabilitiesTrade and other payables 1,732,185 - - 1,732,185Non-current liabilitiesLong-term borrowings 17,305,000 - - 17,305,000 --------- --------- --------- ---------Net assets 14,532,755 - 9,783 14,542,538 ========= ========= ========= =========EquityShare capital 7,143,196 - - 7,143,196Share premium account 30,896,287 - - 30,896,287Profit and loss account (26,381,848) - 9,783 (26,372,065)Merger Reserve 2,402,674 - - 2,402,674Shares options reserve 472,446 - - 472,446 --------- -------- --------- --------- Total equity 14,532,755 - - 14,542,538 ========= ========= ========= ========= Reconciliation of equity at 31 March 2007 Adjustments UK GAAP a b c IFRS £ £ £ £ £ Non-current assetsProperty, plant and equipment 54,893 - - - 54,893Goodwill 6,928,068 (6,842,137) 18,779 - 104,710Other intangible assets 230,350 6,842,137 - - 230,350 Investments in associate 21,730,019 - - (423,308) 28,148,848Current assets Trade and other receivables 1,401,669 - - - 1,401,699Cash and cash equivalents 1,948,586 - - - 1,948,586 Current liabilitiesTrade and other payables 1,848,429 - - - 1,848,429 Current portion of long-term borrowings 160,000 - - - 160,000 Non-current liabilities Long-term borrowings 17,305,000 - - - 17,305,000Other non-current liabilities 704,390 - - - 704,390 --------- --------- --------- --------- ---------Net assets 12,275,766 - 18,779 (423,308) 11,871,237 ========= ========= ========= ========= =========Equity Share capital 7,143,197 - - - 7,143,197Share premium account 30,896,287 - - - 30,896,287Merger reserve 2,402,674 - - - 2,402,674Profit and loss account (28,554,918) - 18,779 (423,308) (28,959,447)Shares options reserve 388,526 - - - 388,526 --------- --------- --------- --------- ---------Total equity 12,275,766 - 18,779 (423,308) 11,871,237 ========= ========= ========= ========= ========= Reconciliation of profit for the 6 months ended 30 September 2006 Adjustments UK GAAP a b IFRS £ £ £ £Revenue 138,949 - - 138,949Cost of sales (11,695) - - (11,695) --------- --------- --------- ---------Gross profit 127,254 - - 127,254 Other Income - - - -Administrative costs (661,558) - 9,783 (651,775) --------- --------- --------- ---------Operating profit (534,304) - 9,783 (524,521)Finance income 3,112 - - 3,112Finance costs (493,771) - - (493,771) --------- --------- --------- ---------Net finance income/(cost) (490,659) - - (490,659)Share of profit of associates - - - - --------- --------- --------- ---------Profit before tax (1,024,963) - 9,783 (1,015,180) Income tax expense 329,500 - - 329,500 --------- --------- --------- ---------Profit for the period (695,463) - - (685,680) ========= ========= ========= =========Attributable to: Equity holders of the parent (695,463) - - (685,680)Minority interest 198,371 - - 198,371 --------- --------- --------- --------- (497,092) - - (487,309) ========= ========= ========= ========= Reconciliation of profit for the year to 31 March 2007 Adjustments UK GAAP a b c d e IFRS £ £ £ £ £ £ £ Revenue 283,818 - - - - - 283,818Cost of sales 16,674 - - - - - 16,674 ------- ------- ------- ------- ------- ------- -------Gross profit 267,144 - - - - - 267,144Other income 151,705 - - - - - 151,705Administrative costs (4,807,826) 18,779 902,844 (3,886,203) ------- ------- ------- ------- ------- ------- -------Operating profit (4,388,977) - 18,779 - - 902,844 (3,467,354)Finance income 102,666 - - - (95,000) - 7,666Finance costs (1,227,128) - - - - (902,844) (2,129,972) ------- ------- ------- ------- ------- ------- -------Net finance income/(cost) (1,124,462) - - - (95,000) (902,844) (2,122,306)Share of profit of associates 2,394,000 - - (423,308) (663,000) - 1,307,692 ------- ------- ------- ------- ------- ------- -------Profit before tax (3,119,439) - 18,779 (423,308) (758,000) - (4,281,968)Income tax expense 252,757 - - - 758,000 - 1,010,757 ------- ------- ------- ------- ------- ------- ------- Profit for the period (2,866,682) - 18,779 (423,308) - - (3,271,211) ======= ======= ======= ======= ======= ======= ======= Attributable to:Equity holders of the parent (2,668,311) - - - - - (3,469,582)Minority interest 198,371 - - - - - 198,371 ------- ------- ------- ------- ------- ------- ------- (2,866,682) - - - - - (3,271,211) ======= ======= ======= ======= ======= ======= =======Notes to the reconciliations a) The group previously recognised certain items as being in relation tothe acquisition of a subsidiary and giving rise to goodwill in that respect. Onthe adoption of IFRS and the application of IAS 39 (Financial instruments:Recognition and measurement) and IAS 28 (Investments in associates) these itemshave been reclassified as appropriate. b) In accordance with IFRS 3, goodwill arising on the acquisition of asubsidiary is no longer amortised and therefore any adjustment to amortisegoodwill under UK GAAP during the period since transition to IFRS has beenreversed. c) In accordance with IAS 28 (Investments in associates) a fair valueexercise has been carried out in accordance with the principles of IFRS 3 *(Business combinations). As a consequence, certain intangible assets (customercontracts and relationships) with a finite life have been recognised withrelated deferred tax liabilities and are carried within the group's share of netassets in its associate within the 'Investment in associate' caption in thefinancial statements in accordance with IAS 28. These intangible assets areamortised over their useful economic life (which the Board consider to be 20years) with the related deferred tax liability released over the same period. d) In accordance with IAS 28 only the profit after tax is disclosed inrespect of the share of the profit from associates which has led to areclassification from the UK GAAP presentation. e) In accordance with IAS 32 'Financial instruments: Presentation'certain costs have been reclassified within the income statement. This information is provided by RNS The company news service from the London Stock Exchange