Catalyst Media Regulatory News (CMX)

5 Aug 2005 09:30

Catalyst Media Group PLC05 August 2005 5 August 2005 CATALYST MEDIA GROUP PLC ("CMG" or "the Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST OCTOBER 2004 Catalyst Media Group plc, the media company, today announces its preliminaryresults for the year ended 31 October 2004, which should be read in conjunctionwith the unaudited interim results for the six months ended 30 April 2005 alsoannounced 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. CHAIRMAN'S STATEMENT The past financial year has produced a mixture of significant achievement anddisappointment for the Company. We completed the acquisition and integration ofBetelgeuse Productions Inc ("Betelgeuse") and saw our two existing USsubsidiaries, Global Media Services Inc ("GMS") and NPG Inc performing in linewith expectations and were focused on driving the business forward. In May 2004we changed the name of the group from Newsplayer Group plc to Catalyst MediaGroup plc and our ticker symbol from NPG to CMG, to reflect the way our businesshad evolved since the launch of Newsplayer.com four years previously and the newdiversity within the group. At the time of our interim report published in June2004 we announced that, building on our progress in the previous financial year,we had achieved our target of being profitable on a monthly basis and that wewere on course to make a profit for the financial year ending 31 October 2004. However, it subsequently became apparent that cost overruns on a televisioncontract to produce the Champ Car World Race Series by the Company's New Yorkbased television production subsidiary Betelgeuse, meant that we would record aloss after tax for the year of £2.0 million. In addition to this trading resultwe have taken a one-off goodwill impairment charge of £2.2 million. This resultsin a loss after tax for the year of £5.4 million on sharply increased turnoverof £7 million compared with a loss after tax for the previous year of £6.3million on turnover of £0.26 million. It is important to note that without the impact of the Champ Car contract thegroup would have broken even for the financial year as a whole at the EBITDAlevel. GMS and NPG Inc continue to grow in line with expectations and Betelgeuseis now focussing on its production capabilities following extensiverestructuring. In addition, our UK business has signed new distribution dealsfor our interactive content channels with NTL, Cinema Now and MSN reflectingprogress in the market for pay content on the Internet which bodes well for thefuture. We also announced in June 2004 that we were in the process of acquiring a 20 percent. stake in Satellite Information Services (Holdings) Limited ("SIS") andthat we expected to complete the process in the middle of August 2004. Thisacquisition proved much more difficult than we envisaged and it has taken a yearlonger than we anticipated to conclude, but I am delighted that we are now ableto provide details of the transaction which are contained in a circular sent toshareholders today. SIS provides bookmakers with live television pictures, datadisplay systems and broadcast services. They have over 18 years of expertise inthe industry and now provide their services to the majority of bookmakers in theUK and Ireland, as well as in many territories in Europe, the Caribbean and SriLanka. SIS produces live coverage of approximately 28,000 horse and greyhoundraces a year to approximately 9,500 Licensed Betting Outlets ("LBO's"). SIS alsoproduces the At The Races channel on the Sky satellite platform and is one ofEurope's largest independent satellite uplink service providers through its SISLink operation. SIS generated profit after tax for the financial year 31 March2004 of £10.3 million (31 March 2003: £9.0 million) and has a history ofsustained growth. I am confident that this acquisition, if concluded, will provevery beneficial to CMG in terms of both the financial performance and potentialsynergies offered by SIS. I would like to pay tribute to the single mindeddetermination of Paul Duffen, our Chief Executive, who has demonstrated greattenacity and leadership in bringing the SIS transaction to a conclusion. Share issues In February 2004, in connection with the acquisition of Betelgeuse, the Companyraised £2,750,200, before expenses, in additional working capital through aplacing of 13,096,191 new shares with new and existing shareholders. Board changes In May 2004 David Wiseman stepped down as Chief Financial Officer and StevenSmith, previously Deputy Chairman, was appointed Chief Financial Officer. Stevensubsequently resigned from the Board in June 2005 and handed over the CFO roleto Anna Goodsell who will join the Board following completion of the SIStransaction. In May 2005 Adam Cohen stepped down from the Board to concentrateon developing GMS the Group's New York based media services business. I thankDavid, Steven and Adam for their respective contributions to the Board andextend my best wishes to Anna for her future with the Group. Also in May 2004 Michael Rosenberg was appointed to the board as a non-executiveDirector. Michael brings with him a wealth of experience having started hiscareer at Samuel Montagu & Co. Limited, the merchant bank, in 1957 beforejoining its board in 1971. In 1974 he co-founded Allied Investments Limited, aninternational healthcare group. He was a founding director and shareholder ofTVam, the breakfast channel, and has been a director of David Paradine Limited,the holding company for Sir David Frost's business interests, since 1974.Between 1989 and 1999, Michael was a director and subsequent Chairman of RaphaelZorn Hemsley Holdings plc, now Numis Corporation plc. He has been the chairmanof Pilat Media Global plc, a media software company quoted on AIM, since 2002.Following completion of the SIS transaction I will step down as Chairman of CMG,to avoid any conflict with my role as Chief Executive of SIS and I am delightedthat Michael has agreed to become my successor. I have tremendously enjoyed thelast 6 years in my role as Chairman of the Company; I wish Michael and the Boardevery success in the future and look forward to working with them in our newrelationship. The Group has weathered the storm caused by the difficulties in New York. It isnow well placed to benefit from the recent management initiatives and theanticipated dividend and profit contribution from our investment in SIS. Thefuture for CMG is very exciting and I look forward to watching its progress. David HoldgateChairman 4 August 2005 CHIEF EXECUTIVE OFFICER STATEMENT The acquisitions of GMS and Betelgeuse have been significant developments forthe Company and reflect our commitment to building a world class cross platformdigital media business. GMS has shown strong growth and is now well positionedprovide interactive digital video services to the North American motor sportindustry. For the 2004 Champ Car season CMG provided both the television andInternet production capability through Betelgeuse and GMS respectively. Theproblems that Betelgeuse encountered in fulfilling their contract have been welldocumented and should not be allowed to obscure the great success of GMS indeveloping the Race Director platform which delivers a whole new level ofinteraction and control to the motor sport fan. This work was rewarded byrenewal of the Internet production contract for the 2005 season and subsequentnew business wins from three other US motor sport series. Meanwhile Betelgeusehas been re-structured and is focusing on its core strengths which have seen itwin over 50 Emmy's in the past 20 years. We have made a sustained investment in our original US subsidiary, NPG Inc.,over the past year to enable it to develop Footage.net, the world's leadingstock footage portal, into a fully transactional platform. The new environmentwill go live in October 2005 and will provide stock footage archives andproduction researchers with the first comprehensive exchange to buy and sellstock footage. In the UK we are starting to see the genesis of a broadband infrastructure thatwill enable IPTV to become reality within the next 3 years and thereby presentan ideal opportunity to exploit the intellectual property assets to which wehave rights. In the short term we are seeing an increase in broadband contentlicensing activity and have started to gain recognition in the US by securingdistribution deals with Cinema Now and MSN. After more than a year since we first announced our intention to buyAlternateport, (the company that owns 20% of SIS) from United Business Mediaplc, we are delighted to have finally concluded negotiations to complete thetransaction. It has proven more difficult and taken much longer than weanticipated and in the meantime our share price has suffered. I am firmly of the view that this acquisition will be a truly transforming dealfor CMG. I am confident that this deal will provide multiple benefits to the Company.There is a full description of and financial information for the SIS business inthe circular which is being sent to shareholders today. Apart from thesignificant financial contribution through the anticipated dividends and profit,SIS represents an important opportunity for CMG to apply our interactivetechnology to the world of horseracing and betting. I believe that with our experience in the world of live sports streaming gainedin the US with Champ Car and the platform we have built for that purpose we areideally positioned to take advantage of developments in the industry thatrequire the combination of streaming video and real time customer interaction. One sad consequence of the SIS transaction is that our Chairman, David Holdgate,who is also Chief Executive of SIS will have to step down from the board of CMG.I want to thank David for his support over the 6 years that we have workedtogether and I am delighted that I will be able to continue our workingrelationship by now sitting on his Board. I warmly welcome Michael Rosenberg OBEto the role of Chairman as David's successor and look forward to taking CMG tothe next level with his help and guidance. Paul Duffen Chief Executive Officer FINANCIAL RESULTS Consolidated Profit and Loss accountFor the year ended 31 October 2004 Note Year ended Year ended 31 Oct 2004 31 Oct 2003 £ £ TurnoverContinuing operations 1 7,044,535 264,522 Cost of sales (6,843,917) (118,485) ---------- ---------- Gross profit 200,618 146,037Operating expenses (3,359,608) (4,671,569) ---------- ---------- Operating loss (3,158,990) (4,525,532)Impairment of goodwill (2,194,000) (1,995,234)Interest receivable 29,195 7,673Interest payable (80,660) (15,341) ---------- ----------Loss on ordinary activities before taxation (5,404,455) (6,528,434)Taxation (1,166) 204,269 ---------- ----------Loss on ordinary activities after taxation (5,405,621) (6,324,165) ========== ========== Loss per ordinary share 2 (4.02p) (7.88p)Diluted Loss per ordinary share 2 (4.02p) (7.88p) Statement of Total Recognised Gains and LossesFor the year ended 31 October 2004 Year ended Year ended 31 Oct 2004 31 Oct 2003 £ £Loss for the year (5,405,621) (6,324,165)Currency translation difference 3,063 16,566 --------- ----------Total recognised losses for the year (5,402,558) (6,307,599) ========= ========== Consolidated Balance SheetAs at 31 October 2004 Note At 31 Oct At 31 Oct 2004 2003 £ £Fixed assetsIntangible assets 5,255,822 3,342,067Tangible assets 258,216 171,617 ---------- --------- 5,514,038 3,513,684 Current assetsDebtors 1,744,291 186,595Cash at bank 427,160 587,323 ---------- --------- 2,171,451 773,918Creditors: amounts falling due within oneyear (6,557,561) (1,896,570) ---------- ---------Net current liabilities (4,386,110) (1,122,652) ---------- --------- Total assets less current liabilities 1,127,928 2,391,032 Creditors: amounts falling due after morethan one year (1,012,122) (160,000) ---------- ---------Total net assets 115,806 2,231,032 ========== ========= £ £Capital and reservesCalled up share capital 3 1,405,099 1,214,624Shares to be issued 476,000 1012,640Share premium account 15,303,683 12,775,192Merger reserve 2,402,674 1,295,676Profit and loss account (19,471,650) (14,069,092) ---------- --------- Equity shareholders' funds 115,806 2,229,040 Minority Interests - 1,992 ---------- ---------- 115,806 2,231,032 ========== ========== Consolidated Cash Flow StatementFor the year ended 31 October 2004 Note Year ended Year ended 31 Oct 2004 31 Oct 2003 £ £ Net cash outflow from operating 4 (2,087,355) (1,355,300)activities Returns on investment and servicing offinance (51,465) (1,013) Taxation (1,166) 204,436 Capital expenditure and financial (133,806) (76,922)investment Acquisitions (141,911) (131,825) ---------- ----------Cash outflow before financing (2,415,703) (1,360,624)Financing 2,255,540 1,509,073 ---------- ----------Increase/(decrease) in cash (160,163) 148,449 ========== ========== Notes to the Financial Statements 1. Statement of Accounting policies The financial statements are prepared in accordance with applicable United Kingdom accounting standards. The particular accounting policies adopted are described below. The accounting policies have been all applied consistently throughout this and the preceding year. The financial statements are prepared under the historical cost convention Going concernThe directors consider it appropriate to prepare the financial information on the going concern basis as the Group intends to raise additional funds through an offer for subscription of new ordinary shares and raising of additional debt. In reaching this conclusion the Directors have assumed that the minimum proceeds will be £28.75 million and that this will provide sufficient funds to enable the Group to continue in operational existence for the foreseeable future namely twelve months from the date of approval of this financial information. If the fundraising is not successful the directors would need to raise further funds for the Group to continue as a going concern. The financial statements do not include any adjustments that would result if this going concern basis was not appropriate. Revenue recognition and turnoverRevenue is recognized 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 group's ordinary activities after deduction of trade discounts andvalue added tax. Those provision of services include internet web design, television programmeediting and production, website administration and revenues from streamedadvertising. 2. Loss per share The calculation of the basic loss per share is based on the weighted average number of 134,349,876 issued ordinary shares (2003: 80,225,329) and on the loss attributable to ordinary shareholders of £5,405,621 (2003: £6,324,165). The diluted loss per share calculation is identical to that used for basic earnings per share as the exercise of share options would have the effect of reducing the loss per ordinary share and therefore is not dilutive under the terms of Financial Reporting Standard 14 "Earnings per share". 3. Called up Share Capital Year ended Year ended 31 Oct 2004 31 Oct 2003 £ £Authorised200,000,000 (2003: 130,000,000) ordinaryshares of 1 pence each 2,000,000 1,300,000 Called up, allotted and part paid:140,509,939 (2003: 121,462,443) ordinaryshares of 1 pence each 1,405,099 1,214,624 125,000 Ordinary 1p Shares were issued at a price of 20p per share on 28November 2003 for total consideration of £25,000 to David Holdgate. 13,096,191 Ordinary 1p Shares were placed on 2 February 2004 at a price of 21pper share for total consideration of £2,750,200. In March 2004 the acquisition of Betelgeuse Productions Inc ("BPI") wascompleted and 5,826,305 Ordinary 1p Shares were issued on 21 April 2004 at aprice of 20p per share for total consideration of £1,165,261 for the acquisitionof BPI. At 31 October 2004 there were 9,164,000 (2003: 7,500,000) unapproved shareoptions outstanding under the Executive Share Option Scheme. There were also429,800 warrants in issue, exercisable at any time up to and including the datewhich falls 28 days after the publication of the Company's final results for theyear ending 31st October 2005. 4. Reconciliation of operating loss to operating cash flows Year ended Year ended 31 Oct 2004 31 Oct 2003 £ £ Operating loss (5,352,990) (6,520,766)Write off intangibles 2,194,000 1,995,234Amortisation of Intellectual Property rights - 555,101Prepayment write off - 682,058Depreciation 152,013 92,827Amortisation of goodwill on acquisition 510,702 65,359Loss on disposal of fixed assets 803 12,755Increase in debtors (478,873) 199,019Increase in creditors 875,955 1,547,567 ----------- --------Increase in minority interest - 1,992Exchange adjustment 11,035 13,554 ----------- ---------Net cash outflow from operating activities (2,087,355) (1,355,300) =========== ========= 5. Annual Report The Annual Report has been despatched to shareholders and copies will be available, free of charge, from the Company's office, 5th Floor, Portland House,4 Great Portland Street, London W1W 8QJ. 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