Catalyst Media Regulatory News (CMX)

21 Jul 2006 07:00

Catalyst Media Group PLC21 July 2006 21 July 2006 CATALYST MEDIA GROUP PLC ("CMG" or the "Company") PRELIMINARY RESULTS FOR THE SEVENTEEN MONTHS ENDED 31 MARCH 2006 Catalyst Media Group plc, the media company, today announces its preliminaryresults for the 17 months ended 31 March 2006. 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 tomedia companies in the digitalisation and distribution of broadcast content. CMGalso holds its own rights, specialising in historic entertainment andeducational content, generating revenues from the licensing of content globallyto third parties, from consumer subscriptions, pay-per-view fees and fromadvertising revenue. CMG also owns an effective 17.7% stake in Satellite Information Services(Holdings) Limited ("SIS"), the leading producer of sports content in the UK,providing over 9,700 bookmakers with live television pictures, data displaysystems and other broadcast services. OPERATIONAL HIGHLIGHTS The 17 months to 31 March 2006 has been the most significant period ofdevelopment in the history of CMG. In September 2005, we completed theacquisition of a 20% stake in SIS from United Business Media plc. Followingshare repurchases by SIS in November 2005 and March 2006, our stake increased to22.2%. The SIS stake is held through our subsidiary company, Catalyst MediaHoldings Ltd ("CMH"), which is owned 80% by CMG and 20% by Eureka InteractiveFund Ltd. Consequently, our current effective interest in SIS is 17.7%. Following the SIS acquisition, we embarked on a strategy to de-risk and reducecosts in the Group so as to maximise the benefit to shareholders of our interestin SIS. As part of this process, Global Media Services ("GMS"), the New Yorkbased media services business, was sold to its management in October 2005. Asconsideration, CMG will receive 15 per cent. of the gross revenues of theholding company of GMS from 1 January 2006 to 31 December 2010. In addition,BPI, the wholly owned New York based television production company, entered intoan agreement with PowPix Productions which assumed responsibility for runningBPI's post production facility. As a result of this agreement, BPI's annual costbase has been reduced from £1.1 million to less than £50,000. CMG remains indiscussions with a number of interested parties with regard to the disposal ofits remaining US subsidiary, NPG Inc., which operates the world's leading stockfootage portal, Footage.net. In the UK a comprehensive re-structuring wasimplemented, which has reduced annual overheads by a further £500,000. In December 2005, SIS paid an interim dividend of £10 million, which yielded£2.2 million for CMH, the proceeds of which were applied to the early reductionof the debt raised to part finance the SIS acquisition. SIS continues to performahead of expectations and the Board expects a substantial dividend to be paid inthe third quarter of 2006 which should enable us to repay the majority of theremaining debt. We are confident of the prospects for SIS and have reached anagreement in principle with Eureka Interactive Fund Ltd to purchase their 20%stake in CMH for £5.5 million in cash. This consideration will be funded fromthe proceeds of the anticipated dividend and if necessary through bank financesecured against the shares in SIS. This transaction will result in CMH becominga wholly-owned subsidiary of the Group, which will then benefit from the full22.2% shareholding in SIS. Since the period end, we have made our first investment in building theoperational side of the business to reflect our new focus on the gaming sector,whilst leveraging our core skills in on-line distribution. In June 2006, weannounced the launch of an on-line gaming platform complete with a suite offixed odds and exclusive head to head games. As part of this initiative CMG hasacquired an exclusive five year licence from YooMedia plc ("YooMedia") for thehead to head version of Tringo, the compelling interactive game that is acombination of Tetris and Bingo and has agreed, subject to contract, to acquirethe entire issued share capital of Spoof.com Limited which has developed anon-line, head to head version of the traditional pub game, "Spoof". The offeringwill also include fixed odds games such as Roulette, Keno and dice games. CMGhas also acquired a five year licence from YooMedia for the Engage technologyplatform which will enable gamers to play head to head cash or prize based gamesagainst each other across mobile phone, PC and TV platforms. Under theagreement, YooMedia will migrate the Spoof and Tringo products onto the Engageplatform and provide back office, payment fulfilment, gaming licence, customersupport and technology facilities. The Board believes that the head to headgaming sector is an under-exploited and potentially lucrative market withexciting growth prospects. As a result of the widespread re-structuring and receipt of the SIS interimdividend, CMG recorded retained profit for the five month period to 31 March2006 of £1.38 million. This reduced the retained profit for the 17 month periodto £5.9 million. For the current year to 31 March 2007, the Group will reflectthe full benefit of our SIS investment combined with the contribution from ouroperating businesses and the Board is confident of a strong financialperformance with positive cash flows and earnings. FINANCIAL RESULTS CMG recorded a retained profit for the five month period ended 31 March 2006 of£1.38 million and retained loss for the 17 month period ended 31 March 2006 of£5.9 million. The profit for the 5 months ended 31 March 2006 was mainlyattributable to the £2.2m dividend received from SIS, positive gross profit inNewsplayer International and NPG Inc, and lower operating overheads due to theGroup restructuring. No dividend has been proposed or paid. 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 the 17month period ended 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 Directors anticipate that receipt of theSIS dividend will repay the outstanding debt in respect of this investmentwithin the next 5 months, subject only to any debt required to purchase thestake held by Eureka. CMG has now restructured and re-focused and is in a strongposition. We are actively seeking accretive, synergistic investments to leveragethe earnings from SIS and drive value for shareholders. Paul DuffenChief Executive Officer Enquiries:Paul Duffen, Chief ExecutiveCatalyst Media Group plc+44 20 7927 6699 Results for the period ended 31 March 2006 Consolidated profit and loss accountFor the seventeen months ended 31 March 2006 Note 5 months ended 12 months ended 17 months ended Year ended 31 Mar 2006 31 Oct 2005 31 Mar 2006 31 Oct 2004 £ £ £ £ (unaudited) (unaudited) (audited) (audited) TurnoverContinuingoperations 1 166,217 224,786 391,003 794,623Discontinuedoperations 74,583 2,414,354 2,488,937 6,249,912 ---------- ---------- ---------- ---------- 240,800 2,639,140 2,879,940 7,044,535 Cost of sales (60,643) (2,176,576) (2,237,219) (6,843,917) ---------- ---------- ---------- ---------- Gross profit 180,157 462,564 642,721 200,618Operatingexpenses: - goodwill impairment - (2,457,022) (2,457,022) (2,194,000) - other (73,353) (4,165,246) (4,238,599) (3,359,608) ---------- ---------- ---------- ---------- (73,353) (6,622,268) (6,695,621) (5,553,608) Operatingprofit /(loss) 2Continuingoperations (1,406,367) (3,130,077) (4,536,444) (1,870,208)Discontinuedoperations 1,513,171 (3,029,627) (1,516,456) (3,482,782) ---------- ---------- ---------- ---------- 106,804 (6,159,704) (6,052,900) (5,352,990) Loss ondisposal ofsubsidiary (310,519) (1,635,994) (1,946,513) -Interestreceivable andsimilar income 1,619,488 685,619 2,305,107 29,195Interestpayable (427,827) (282,507) (710,334) (80,660) ---------- ---------- ---------- ---------- Profit/(loss)on ordinaryactivitiesbeforetaxation 987,946 (7,392,586) (6,404,640) (5,404,455) Taxation 547,250 151,999 699,249 (1,166) ---------- ---------- ---------- ---------- Profit/(loss)on ordinaryactivitiesafter taxation 1,535,196 (7,240,587) (5,705,391) (5,405,621) ========== ========== ========== ==========MinorityInterest (150,957) (68,793) (219,750) -Profit/(loss)for the period 1,384,239 (7,309,380) (5,925,141) (5,405,621) ========== ========== ========== ========== Note 3:Basic anddiluted lossper ordinaryshare (1.21p) (4.02p)Basic anddiluted lossper ordinaryshare:continuingoperations (0.94p) (1.39p)Basic anddiluted lossper ordinaryshare:discontinuedoperations (0.27p) (2.64p) Consolidated Statement of Total Recognised Gains and LossesFor the seventeen months ended 31 March 2006 17 months ended Year ended 31 March 2006 31 October 2004 £ £ Loss for theperiod (5,925,141) (5,405,621)Currencytranslationdifference (69,745) 3,063 ---------- ---------Totalrecognisedlosses for theperiod (5,994,886) (5,402,558) ========== ========= Consolidated Balance SheetAs at 31 March 2006 Note At At 31 March 31 October 2006 2004 £ £ Fixed assetsIntangible assets 4 117,352 5,255,822Tangible assets 89,367 258,216Investments 23,115,000 - ---------- ---------- 23,321,719 5,514,038 Current assetsDebtors 5 472,438 1,744,291Cash at bank 634,250 427,160 ---------- ---------- 1,106,688 2,171,451Creditors: amounts falling due within one year 6 (4,022,475) (6,557,561) ---------- ----------Net current liabilities (2,915,787 (4,386,110) ---------- ---------- Total assets less current liabilities 1,127,928 Creditors: amounts falling due after more thanone year 7 (9,049,491) (1,012,122) ---------- ----------Net assets 11,356,441 115,806 ========== ========== £ £Capital and reservesCalled up share capital 6,272,361 1,405,099Shares to be issued - 476,000Share premium account 27,928,193 15,303,683Merger reserve 2,402,674 2,402,674Profit and loss account (25,466,537) (19,471,650) ----------- ---------- Equity shareholders' funds 9 11,136,691 115,806 Minority interest 219,750 - ----------- ---------- 11,356,441 115,806 =========== ========== Consolidated Cash Flow StatementFor the seventeen months ended 31 March 2006 Note 17 months ended Year ended 31 March 31 October 2006 2004 £ £ Net cash outflow from operatingactivities 10 (4,806,932) (2,087,355) Returns on investment and servicingof finance 11 1,594,773 (51,465) Taxation 334,249 (1,166) Capital expenditure 11 (20,482) (133,806) Acquisitions 11 (23,115,000) (141,911) ---------- ---------Cash outflow before financing (26,013,392) (2,415,703) Financing 11 26,220,482 2,255,540 ---------- ----------Increase/(decrease) in cash 12 207,090 (160,163) ========== ========== Notes to the Accounts 1. Accounting policies and additional information The results which have been extracted from the accounts for the period ended 31March 2006 and the year ended 31 October 2004 do not constitute the statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Theaccounts for the year ended 31st October 2004 have been delivered to theRegistrar and included the auditors' report which was unqualified and did notcontain a statement either under section 237(2) or 237(3) of the Companies Act1985. The accounts for the period ended 31 March 2006 will be distributed to theshareholders and delivered to the Registrar in due course. The accounting policies are consistent with those applied in the preparation ofthe statutory accounts for the year ended 31 October 2004. Basis of accounting The financial statements are prepared under the historical cost convention. Basis of consolidation The group financial statements consolidate the financial statements of CatalystMedia Group plc and all of its subsidiaries at the period end. Revenue recognition and turnover Revenue 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 group's 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 17 months Year ended 31 ended 31 March October 2006 2004 £ £Operating loss is stated after charging:Amortisation of goodwill 677,334 510,702Depreciation 185,301 152,013 ----------- -------- 3. Loss per share The calculation of basic loss per share has been based on the loss aftertaxation and minority interest for the period 17 months to 31 March 2006 of£5,925,141 (2004: £5,405,621) and the weighted average number of ordinary sharesin issue during the period of 488,640,167 (2004: 134,349,876). The lossattributed to continuing items totals £4,594,020 (2004:£1,861,761) anddiscontinued items totals £1,331,121 (2004: £3,543,860). 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 Reporting Standard 22 "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 - 30,467Disposals - (2,668,912) - (2,668,912)Foreignexchangeadjustments - 11,079 - 11,079 ---------- --------- --------- ---------At 31 March2006 94,951 5,317,498 4,213,834 9,626,283 ========== ========= ========= ========= Amortisation At 1 November2004 - (2,783,993) (4,213,834) (6,997,827)Charge for theperiod (94,951) (582,383) - (677,334)Disposals - 627,700 - 627,700 ---------- --------- --------- ---------Impairment - (2,457,021) - (2,457,021)Foreignexchangeadjustments (4,449) (4,449) ---------- --------- --------- ---------At 31 March2006 (94,951) (5,200,146) (4,213,834) (9,508,931) ========== ========= ========= ========= Net book valueAt 31 March2006 - 117,352 - 117,352 ========== ========= ========= ========= At 31 October2004 64,484 5,191,338 - 5,255,822 ========== ========= ========= ========= In December 2005 the Directors performed an impairment review of intangibleassets held by the Group. As a result of that review, it was determined that thecarrying value of Betelgeuse Productions Inc goodwill should be impaired due toinsufficient expected earnings related to those assets. Consequently goodwillwas impaired by £2,457,021. 5. Debtors: At At 31 March 31 October 2006 2004 £ £Trade debtors 112,547 658,335Other debtors (including £136,157 due in greater thanone year) 201,478 144,808Called up share capital not paid - 10,500Prepayments and accrued income 158,413 930,648 ---------- ---------- 472,438 1,744,291 ========== ========== 6. Creditors: amounts falling due within one year At At 31 March 31 October 2006 2004 £ £Bank loan and overdraft 121,028 759,640Other loans (including convertible loan note) 1,640,612 387,138Obligations under finance leases 285,134 191,012Trade creditors 296,980 2,234,625Other taxation and social security 61,799 238,657Other creditors 516,390 1,314,948Accruals and deferred income 1,100,532 1,431,541 ---------- --------- 4,022,475 6,557,561 ========== ========= 7. Creditors: amounts falling due after more than one year At At 31 March 31 October 2006 2004 £ £Bank loan - 51,494Loan notes - 637,507Deep Discount bonds 9,049,491 -Obligations under finance leases - 122,263Convertible loan note - 160,000Other creditors - 40,858 ---------- --------- 9,049,491 1,012,122 ========== ========= 8. Changes in share capital 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. 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 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 September 2005, 3,055,556 new ordinary shares of 1p were issued to ParadineProductions, a company owned by Sir David Frost OBE at 4p per share for2,500,000 shares and 18p for 555,556 shares. 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. At 31 March 2006 there were 36,630,952 (2004:9,164,000) unapproved share optionsoutstanding under the Executive Share Option Scheme. There were 18 millionwarrants in issue, exercisable at any time up to and including the 27 May 2010and further warrants in issue for 1 per cent of the issued share capital of thecompany at the time of exercise of the warrant which are exercisable at any timeup to and including 4 August 2010. 9. Reconciliation of movement in shareholders' funds 17 months Year ended ended 31 March 31 October 2006 2004 £ £ Loss for the period (5,925,141) (5,405,621)Issue of shares 17,015,771 3,289,324Minority Interest 219,750 -Currency translation difference (69,745) 3,063 ----------- ----------Net increase/(reduction) in shareholders' funds 11,240,635 (2,113,234)Opening shareholders' funds 115,806 2,229,040 ----------- ----------Closing shareholders' funds 11,356,441 115,806 =========== ========== 10. Reconciliation of operating loss to operating cash flows 17 months Year ended ended 31 March 31 October 2006 2004 £ £ Operating loss (6,052,899) (5,352,990)Impairment of intellectual property rights 2,457,022 2,194,000Depreciation 185,301 152,013Amortisation of goodwill on acquisition 677,334 510,702Loss on disposal of fixed assets - 803(Decrease)/Increase in debtors 1,314,051 (478,873)(Decrease)/increase in creditors (3,284,927) 875,955Exchange adjustment (102,814) 11,035 ----------- ----------Net cash outflow from operating activities (4,806,932) (2,087,355) =========== ========== 11. Analysis of cash flows for headings netted in the cash flow statement At At 31 Mar 31 Oct 2006 2004 £ £Returns on investments and servicing of financeInterest paid (692,406) 29,195Interest paid on finance leases (17,928) (66,559) ----------- ----------Dividend received 2,205,403 -Interest received 99,704 (14,101) ----------- ---------- 1,594,773 (51,465) ----------- ----------Capital expenditure and financial investmentPurchase of intangible assets (161,446) (73,811)Purchase of tangible assets (30,467) (59,995)Proceeds on the disposal of fixed assets 171,431 - ----------- ---------- (20,482) (133,806) ----------- ----------FinancingCapital element of finance lease payments (28,141) (63,868)Repayment of bank loan (690,106) (263,318)Repayment of loan notes (2,700,509) (129,470)Issue of ordinary share capital 17,068,272 2,660,702Issue of bank loan - 51,494Issue of loans 12,570,966 - ----------- ---------- 26,220,482 2,255,540 ----------- ----------AcquisitionPurchase of business (23,115,000) (141,911) ----------- ---------- (23,115,000) (141,911) ----------- ---------- 12. Reconciliation of net cash flow to movement in net (debt)/funds At At 31 Mar 31 Oct 2006 2004 £ £Decrease in cash in the period 207,090 (160,163)Loans and finance leases acquired with subsidiary - (2,551,366)Repayment of loan notes - 129,470Repayment of bank loan 699,301 263,318Repayment of finance leases 44,161 63,868Decrease / (Increase) bank loan - (51,494)Increase in loans (9,444,491) -Translation (86,182) (2,850) ----------- ----------Movement in debt in the period (8,580,121) (2,309,217)Net (debt)/funds at start of period (1,881,894) 427,323 ----------- ----------Net (debt) at end of period (10,462,015) (1,881,894) =========== ========== 13. Analysis of net (debt)/funds At 31 October Cash flow Exchange At 31 March 2004 Movement 2006 £ £ £ £ Cash at bank 427,160 207,090 - 634,250Bank loan (811,134) 699,301 (9,195) (121,028)Convertible loan note (160,000) - - (160,000)Finance leases (313,275) 44,161 (16,020) (285,134)Loan notes (1,024,645) - (60,967) (1,085,612)Other loans (9,444,491) - (9,444,491) --------- --------- -------- ---------- (1,881,894) (8,493,939) (86,182) (10,462,015) ========= ========= ======== ========== 14. Post balance sheet events In May 2006, 3,100,264 new ordinary shares of 1 pence each were issued at 3.79pence per share to settle the total sum of £117,500, 437,500 new ordinary sharesof 1 pence each were issued at 4 pence per share to settle the total sum of£17,500 and 97,222 new ordinary shares of 1 pence each were issued at 18 penceper share to settle the total sum of £17,500 all to Paradine Productions, acompany owned by Sir David Frost OBE. In June 2006, 44,444,446 new ordinary shares of 1 pence were agreed to be issuedat 4.5 pence per share to YooMedia plc for an exclusive five year licence forthe head to head version of Tringo, fixed odds games such as Roulette, Keno andDice games, and a 5 year licence for the Engage technology platform. 32.78million shares will be issued immediately and the remaining 11.66 million shareswill be issued once the integration work is completed. In July 2006, 13,751,375 new ordinary shares of 1 pence were issued at 4 penceper share to settle the sum of £1,085,612 payable to J. Servidio and S. Domenicounder the Betelgeuse Stock Purchase Agreement resulting in a cash saving of£535,557. This Preliminary Report was approved by the Directors on 20th July 2006. 15. The report will be sent to all registered shareholders and will beavailable to members of the public from the Company's registered office atPortland House, 4 Great Portland Street, London W1W 8QJ and online from theCompany's corporate website at www.CMG-plc.com. This information is provided by RNS The company news service from the London Stock Exchange