TIDMCMX

RNS Number : 6984T

Catalyst Media Group PLC

30 March 2021

30 March 2021

Catalyst Media Group Plc

("CMG", "Catalyst" or the "Company")

Interim Results for the Six Months Ended 31 December 2020

Catalyst (AIM: CMX) is pleased to announce its unaudited interim results for the six months ended 31 December 2020.

CMG is a 20.54% shareholder in Sports Information Services (Holdings) Limited ("SIS") and the results include its share in the profits/(losses) of SIS as an equity accounted associate.

Financial Highlights for the six months to 31 December 2020

   --        CMG loss after taxation of GBP0.43 million (2019: profit of GBP0.32 million) 
   --        Loss per share of 2.03p (2019: earnings of 1.53p) 
   --        Net asset value per share of 58.7p (2019: 66.3p) 
   --        For the six months to 30 September 2020, SIS achieved 
   -    Revenues of GBP68.6 million (2019: GBP121.1 million) 
   -    Operating loss of GBP2.4 million (2019: profit of GBP1.9 million) 
   -    Loss after tax on ordinary activities of GBP1.9 million (2019: profit of GBP1.7 million) 

-- SIS did not declare or pay any dividends to CMG during the reporting period (2019: GBP5.0 million declared of which GBP1.03 million was received by CMG)

-- CMG has not declared nor paid any dividends during the reporting period (2019: GBP1.05 million declared in October 2019 and paid in November 2019)

Impact of Covid-19

SIS's profitability has been significantly impacted by Covid-19 and its management expects SIS to make a loss for its current financial year to 31 March 2021, of between GBP9 million and GBP10 million.

SIS's operations were impacted by the cancellation of horse and greyhound racing in mid-March 2020. There was an orderly resumption of horse and greyhound racing in England from 1 June 2020 and horseracing in Ireland from 8 June 2020, with the reopening of Licenced Betting Offices in England from 15 June 2020 resulting in an initial return to full operations at SIS until further restrictions were imposed from October 2020 onwards. SIS was able to continue to provide content for its customers during this time and has generally sought to offset revenue shortfalls from retail with increased online digital revenues. Retail betting shops in England are currently due to reopen in mid April 2021 and, assuming no further government restrictions are imposed, SIS's management expect that SIS will return to profitability in its financial year to 31 March 2022 with increased contributions from overseas activities together with expansion in digital and from its recent acquisition of 49's Ltd.

Enquiries:

Catalyst Media Group Plc

   Michael Rosenberg, Non-executive Chairman      Mob: 07785 727 595 
   Melvin Lawson, Non-executive Director               Tel: 020 7734 8111 
   Strand Hanson Limited                                     Tel: 020 7409 3494 

James Harris / Matthew Chandler

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European (Withdrawal) Act 2018.

Chairman's Statement

For the six month period ended 31 December 2020, the Company incurred a net loss after taxation of GBP0.43 million (2019: profit of GBP0.32 million).

Net assets as at 31 December 2020 were GBP12.3 million (30 June 2020: GBP12.8 million). Net cash as at 31 December 2020 was GBP0.2 million (2019: GBP0.3 million).

CMG's main asset remains its 20.54% stake in SIS and the Company received no dividend (2019: dividend of GBP1.03 million) from SIS during the period. The value of CMG's investment in SIS has reduced from approximately GBP12.5 million to approximately GBP12.1 million, due to its share of the loss incurred. As a result, CMG's net assets per share as at 31 December 2020 were 58.7p (2019: 66.3p), though the carrying value of our investment in SIS will need to be reviewed again at our financial year end in light of its present difficulties.

CMG equity accounts for its share in the loss of SIS which was GBP1.9 million after tax for its six month period to 30 September 2020 (2019: profit of GBP1.7 million). SIS's revenues for such period were GBP68.6 million (2019: GBP121.1 million) which were derived from its business of providing integrated television and data services to Licensed Betting Offices in the UK, Ireland and overseas. SIS generated an operating loss for such period of GBP2.4 million, compared to an operating profit of GBP1.9 million in the comparable period for 2019.

CMG currently has cash reserves of approximately GBP0.2 million which is sufficient for its present needs.

Set out below is an overview of the activities of SIS's key divisions for the period under review.

SIS Betting - UK and Ireland Retail

SIS continued to provide a core service based on content from UK Horseracing, Irish Horseracing, British and Irish Greyhounds, 49's and International Horseracing to the UK and Irish retail market, including all the major UK bookmaking groups and the majority of the independent market. SIS also supplies additional content and services to its UK and Irish retail customers to cover the early morning period as well as evening products.

The last year has seen significant disruption from Covid-19 with SIS's retail customers required to close or significantly restrict their operations in shops for various periods of the year. As such, this area of SIS's business has incurred losses in the period.

SIS Betting - International & Online

SIS produces 24/7 channels covering horseracing, greyhound racing, virtual racing and mixed channels, having secured content covering the whole 24-hour period. Such content includes horseracing from Argentina, Latin America, USA, Germany, Spain, Mauritius, Dubai and Saudi Arabia as well the UK and Irish horseracing and greyhound racing from the UK, Ireland and Mexico.

SIS distributes over 50 channels to international retail and online operators designed to maximise betting opportunities with further customers due to go live in the near future. Many of its international and online operators have signed multiyear agreements. SIS continues to progress its strategy for increasing distribution, in both new and existing International and Digital markets, using proprietary production technology as well as streaming and data pricing services.

Covid-19, whilst negatively impacting revenues from international retail operators, has resulted in a significant boost to revenues from online operators as end-customers have sought alternative ways to access and place bets on SIS content. Whilst online revenues are benefitting from the current temporary retail restrictions, there is also significant underlying growth.

India

As previously reported, the claim in respect of the Indian project continues to be pursued but the outcome remains uncertain. The legal and associated costs relating to this claim have been significantly reduced but are still impacting profits. SIS accounts for such legal costs as they arise.

Litigation

As previously announced on 9 October 2020, in the case brought by The Racing Partnership ("TRP") and others against SIS's subsidiary, Sports Information Services Limited ("SISL"), and others, the Court of Appeal handed down judgment in relation to the appeals against various elements of the High Court judgment of Mr Justice Zacaroli in respect of liability issues in the case as follows:

1. Upheld SISL's appeal in relation to the finding of breach of confidence in relation to certain race day data supplied to SISL by a co-defendant; and

   2.       Upheld TRP's appeal against the dismissal of its claims for unlawful means conspiracy. 

There has been no ruling given in respect of damages and SIS has, after consultation with its advisers, sought an appeal to the Supreme Court which it expects to be heard in late 2021 if granted. SISL have been ordered by the judge to pay 20% of TRP's costs.

Current Trading and Impact of Covid-19

SIS's current trading has been significantly impacted by the Covid-19 restrictions placed on its retail operator customers in the UK, Ireland and across the world who have experienced a series of closures and operational restrictions as part of the battle against the Covid-19 pandemic. Most recently, such restrictions have seen Licensed Betting Offices closed across the UK and Ireland since the end of December 2020 with reopening currently expected in England in mid-April 2021 but potentially subject to further operating limitations.

During the period SIS has seen a series of online operators both in the UK and Internationally sign contracts for new or additional content and is experiencing significantly higher revenues from its online operators due to higher volumes of end-customer use. Such higher revenue has helped offset some of the shortfall from retail operators.

SIS's profitability for its financial year to 31 March 2021 has been significantly impacted by Covid-19 and its management expects SIS to make a loss for its current financial year of between GBP9 million and GBP10 million. Although it is too early to be certain of prospects for its financial year to 31 March 2022, it is currently expected by SIS's management that as conditions improve, and retail markets reopen, SIS will return to profitability for that period. Despite the overall adverse impact of Covid-19, SIS has continued to achieve growth in its International and online customer base, most recently launching channels for Latin American and European customers and has seen the launch of its Competitive Gaming (esports) product as well as increased benefit from its acquisition of the 49's business completed earlier in the year.

Outlook

As stated above, it is currently expected that SIS will return to profitability in its next financial year as the benefits from its online businesses and international opportunities develop. The cash position of SIS remains strong though at a lower level than previously anticipated. However, the result of the abovementioned litigation with TRP remains uncertain. Accordingly, no decisions are currently expected to be made with regard to dividend payments by SIS this year. CMG has sufficient working capital for its foreseeable needs and continues to operate at a very low level of overheads.

Michael Rosenberg OBE

Chairman

30 March 2021

Consolidated interim statement of comprehensive income

 
                                               Notes          6 months          6 months      12 months 
                                                        to 31 December    to 31 December     to 30 June 
                                                                  2020              2019           2020 
 
                                                                   GBP               GBP            GBP 
                                                             Unaudited         Unaudited        Audited 
 
 Revenue                                                        12,500            12,500         25,000 
 
 Cost of sales                                                       -                 -              - 
                                                      ----------------  ----------------  ------------- 
 Gross profit                                                   12,500            12,500         25,000 
 
 Administrative expenses                                      (49,424)          (51,279)      (123,600) 
 Other operating income                                              -                 -              - 
                                                      ----------------  ----------------  ------------- 
 Operating loss                                               (36,924)          (38,779)       (98,600) 
 
 Financial income                                                   13               464            712 
 Financial costs                                                     -                 -              - 
 Net financial income                                               13               464            712 
                                                      ----------------  ----------------  ------------- 
 
 Share of profit/(loss) of equity-accounted 
  associate                                                  (384,303)           359,245        125,294 
  Impairment of equity-accounted 
  associate                                      3                   -                 -    (1,160,843) 
 
 Profit/(loss) before taxation                               (421,214)           320,930    (1,133,437) 
 
 Taxation                                                      (4,934)                 -         25,583 
 
 Profit/(loss) for the period                                (426,148)           320,930    (1,107,854) 
                                                      ----------------  ----------------  ------------- 
 
 Share of other comprehensive 
  profit of associate                                                -                 -        262,707 
 Total comprehensive income/(loss) 
  for the period                                             (426,148)           320,930      (845,147) 
                                                      ----------------  ----------------  ------------- 
 
 Attributable to equity holders 
  of the company                                             (426,148)           320,930      (845,147) 
                                                      ----------------  ----------------  ------------- 
 
 Earnings/(loss) per share:                      4 
 Basic                                                         (2.03p)             1.53p        (5.27p) 
                                                      ----------------  ----------------  ------------- 
 Diluted                                                       (2.03p)             1.53p        (5.27p) 
                                                      ----------------  ----------------  ------------- 
 

Consolidated interim statement of financial position

 
                                Notes   31 December    31 December      30 June 
                                               2020           2019         2020 
 
                                                GBP            GBP          GBP 
                                          Unaudited      Unaudited      Audited 
 Assets 
 Non-current assets 
 Investment in associate          3      12,090,677     13,607,067   12,474,980 
                                       ------------  -------------  ----------- 
                                         12,090,677     13,607,067   12,474,980 
                                       ------------  -------------  ----------- 
 
 Current assets 
 Trade and other receivables                 35,734         18,795       62,741 
 Cash and cash equivalents                  260,020        326,182      270,654 
                                       ------------  -------------  ----------- 
                                            295,754        344,977      333,395 
                                       ------------  -------------  ----------- 
 
 Total assets                            12,386,431     13,952,044   12,808,375 
                                       ------------  -------------  ----------- 
 
 Equity and liabilities 
 
 Capital and reserves 
  attributable to equity 
  holders of the parent 
 Share capital                            2,103,202      2,103,202    2,103,202 
 Capital redemption 
  reserve                                   711,117        711,117      711,117 
 Merger reserve                           2,402,674      2,402,674    2,402,674 
 Retained profits                         7,127,752      8,719,977    7,553,900 
                                       ------------  -------------  ----------- 
                                         12,344,745     13,936,970   12,770,893 
                                       ------------  -------------  ----------- 
 
 Current liabilities 
 Trade and other payables                    41,686         15,074       37,482 
 Corporation tax payable                          -              -            - 
                                       ------------  -------------  ----------- 
                                             41,686         15,074       37,482 
                                       ------------  -------------  ----------- 
 
 Total equity and 
  liabilities                            12,386,431     13,952,044   12,808,375 
                                       ------------  -------------  ----------- 
 

Consolidated interim cash flow statement

 
                                                       6 months          6 months     12 months 
                                                 to 31 December    to 31 December         to 30 
                                                           2020              2019          June 
                                                                                           2020 
                                                            GBP               GBP 
                                                      Unaudited         Unaudited           GBP 
                                                                                        Audited 
 
 Cash flow from operating activities 
 Profit / (loss) before taxation                      (421,214)           320,930   (1,133,437) 
 Adjustments for: 
 Share of (profit) / loss from associate                384,303         (359,245)     (125,294) 
 Impairment of investment in associate                        -                 -     1,160,843 
 Finance income                                            (13)             (464)         (712) 
 Corporation taxes recovered                             34,875                 -             - 
                                               ----------------  ----------------  ------------ 
 
 Net cash outflow from operating activities 
  before changes in working capital                     (2,049)          (38,779)      (98,600) 
 (Increase) / Decrease in trade and 
  other receivables                                    (12,802)            20,212         1,849 
 Increase / (Decrease) in trade and 
  other payables                                          4,204          (14,588)         7,820 
 
 Net cash outflow used in operating 
  activities                                           (10,647)          (33,155)      (88,931) 
                                               ----------------  ----------------  ------------ 
 
 Investing activities 
 Dividend received                                            -         1,026,884     1,026,884 
 Interest received                                           13               464           712 
 
 Net cash inflow from investing activities                   13         1,027,348     1,027,596 
                                               ----------------  ----------------  ------------ 
 
 Financing activities 
 Dividends paid                                               -       (1,051,623)   (1,051,623) 
                                               ----------------  ----------------  ------------ 
 Net cash outflow from financing activities                   -       (1,051,623)   (1,051,623) 
                                               ----------------  ----------------  ------------ 
 
 Net movement in cash and cash equivalents 
  in the period                                        (10,634)          (57,430)     (112,958) 
 Cash and cash equivalents at the 
  beginning of the period                               270,654           383,612       383,612 
 
 Cash and cash equivalents at the 
  end of the period                                     260,020           326,182       270,654 
                                               ----------------  ----------------  ------------ 
 

Consolidated interim statement of changes in equity

 
                                            Share   Capital redemption       Merger      Retained   Total shareholders 
                                          capital              reserve      reserve      surplus/               equity 
                                                                   GBP                  (deficit)                  GBP 
                                              GBP            Unaudited          GBP           GBP            Unaudited 
                                        Unaudited                         Unaudited     Unaudited 
 
 At 1 July 2019                         2,103,202              711,117    2,402,674     9,450,670           14,667,663 
 
 Profit for the 6 month period to 31 
  December 2019                                 -                    -            -       320,930              320,930 
 Dividend paid to company 
  shareholders                                  -                    -            -   (1,051,623)          (1,051,623) 
 Total comprehensive loss for the 
  period                                        -                    -            -     (730,693)            (730,693) 
 
 At 31 December 2019                    2,103,202              711,117    2,402,674     8,719,977           13,936,970 
                                      -----------  -------------------  -----------  ------------  ------------------- 
 
 Loss for the 6 month period to 30 
  June 2020                                     -                    -            -   (1,428,784)          (1,428,784) 
 Share of other comprehensive profit 
  of associate                                  -                    -            -       262,707              262,707 
 Total comprehensive loss for the 
  period                                        -                    -            -   (1,166,077)          (1,166,077) 
 
 At 30 June 2020                        2,103,202              711,117    2,402,674     7,553,900           12,770,893 
                                      -----------  -------------------  -----------  ------------  ------------------- 
 
 
                                                 Share   Capital redemption       Merger     Retained           Total 
                                               capital              reserve      reserve     surplus/    shareholders 
                                                                        GBP                 (deficit)          equity 
                                                   GBP            Unaudited          GBP          GBP             GBP 
                                             Unaudited                         Unaudited    Unaudited       Unaudited 
 
 At 1 July 2020                              2,103,202              711,117    2,402,674    7,553,900      12,770,893 
 
 Loss for the 6 month period to 31 
  December 2020                                      -                    -            -    (426,148)       (426,148) 
 Dividend paid to company shareholders               -                    -            -            -               - 
                                           -----------  -------------------  -----------  -----------  -------------- 
 Total comprehensive loss for the period             -                    -            -    (426,148)       (426,148) 
                                           -----------  -------------------  -----------  -----------  -------------- 
 
 At 31 December 2020                         2,103,202              711,117    2,402,674    7,127,752      12,344,745 
                                           -----------  -------------------  -----------  -----------  -------------- 
 

Notes to the interim financial statements

   1.       Corporate information 

CMG is a company incorporated in England and Wales and quoted on the AIM market operated by London Stock Exchange plc.

   2.       Basis of preparation 

These unaudited consolidated interim financial statements cover the six month period from 1 July 2020 to 31 December 2020 including the financial results of Sports Information Services (Holdings) Limited ("SIS") for the six month period to 30 September 2020.

These consolidated interim financial statements of the Company and its subsidiaries (the "Group") for the six months ended 31 December 2020 have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies Act 2006.

The accounting policies adopted for the preparation of these unaudited interim financial statements are consistent with the accounting policies adopted in the Group's financial statements for the year ended 30 June 2020 and will remain so for the year ending 30 June 2021.

The financial information set out above does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2020, on which the report of the auditors was unqualified and did not contain a statement under section 498 of the Companies Act 2006, have been filed with the Registrar of Companies.

New financial reporting requirements

The Group has applied the following new financial reporting standards for the first time in preparing its financial statements for the year ended 30 June 2021. There has been no material impact on the Group's financial statements

-- IFRS 16: Covid-19 Related Rent Concessions

Standards, interpretations and amendments to published standards not yet effective

At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following standard and interpretations which are effective for annual accounting periods beginning on or after the stated effective date. This standard is not effective for, and has not been applied in, the preparation of these consolidated financial statements:

-- IFRS 17: Insurance Contracts (effective as of 1 January 2023)

The Directors anticipate that the adoption of this standard will not have a material impact on the Group's financial statements in the period of initial adoption.

   3.       Investment in associate 
 
                                   Total 
                                   Group 
                                     GBP 
 Cost 
 At 1 July 2020               12,474,980 
 Additions - share of loss     (384,303) 
 Dividend received                     - 
 
 At 31 December 2020          12,090,677 
                             ----------- 
 

The Group's interest in its associate, SIS, a company incorporated in England and Wales, is held by Alternateport Limited ("Alternateport"). Alternateport holds an investment of 20.54% in the equity share capital of SIS and is entitled to appoint a director and alternate director to the SIS board. This right has been exercised since acquisition. Alternateport is a wholly owned subsidiary of Catalyst Media Holdings Limited, a wholly-owned subsidiary of the Company.

The Board has reviewed its valuation of the Company's investment in SIS as at 31 December 2020 and has, in line with the Group's accounting policies, reduced the value of the investment by the amount of its share of losses for the period. As a result, the investment is carried at a value equal to its 20.54% interest in SIS's net assets of GBP58.85m.

 
 Share of profit of associate*    30 September   31 December   31 December     30 June 
                                          2020          2020          2019        2020 
                                     SIS Total     CMG share     CMG share   CMG share 
                                       GBP'000       GBP'000       GBP'000     GBP'000 
 Revenue: 
 SIS Betting Services                   68,604        14,091        24,866      43,667 
 SIS LIVE services                           -             -             -           - 
 
 Total revenue                          68,604        14,091        24,866      43,667 
 
 Operating profit/(loss) 
  from ongoing operations              (2,374)         (488)           393         743 
 Net interest receivable 
  / (payable)                               63            13            54         155 
 Losses on business wind 
  down                                       -             -             -       (735) 
 Profit on disposal of fixed 
  asset                                      -             -             -           - 
 
 Profit/(loss) before tax              (2,311)         (475)           446         163 
 Taxation                                  440            90          (87)        (38) 
                                 -------------  ------------  ------------  ---------- 
 Share of (loss)/income 
  after taxation                       (1,871)         (384)           359         125 
                                 -------------  ------------  ------------  ---------- 
 Net income from associate             (1,871)         (384)           359         125 
 
 Other comprehensive income 
 Actuarial (loss) /gain                      -             -             -         404 
 Deferred tax                                -             -             -       (141) 
                                             -             -             -         263 
                                 -------------  ------------  ------------  ---------- 
 
 Share of gross assets and 
  liabilities of associate 
 Gross assets                          125,516        25,781        22,999      19,273 
 Gross liabilities                    (66,666)      (13,693)       (9,529)     (6,801) 
                                 -------------  ------------  ------------  ---------- 
 Net equity                             58,850        12,088        13,470      12,472 
                                 -------------  ------------  ------------  ---------- 
 

* - The period covered by the associate's accounts is the six months to 30 September 2020. The revenues have been stated excluding internal revenues.

SIS continued to be involved in a litigation case brought by The Racing Partnership ("TRP") and others against SIS's subsidiary, Sports Information Services Limited ("SISL"), and others. SISL has successfully defended two of the three claims and, following the year end, both SISL and TRP have been granted permission by the judge to appeal elements of the judgement. SISL have been ordered by the judge to pay 20% of TRP's costs.

   4.       Earnings/(loss) per share 

The calculation of the basic earnings per ordinary share of 10p each in the capital of the Company ("Share") is based upon the following:

 
                                              6 months       6 months     12 months 
                                                    to             to    to 30 June 
                                           31 December    31 December          2020 
                                                  2020           2019           GBP 
                                                   GBP            GBP 
 Basic and Diluted 
 (Loss)/earnings per share - pence             (2.03p)          1.53p       (5.27p) 
 
 
 (Loss)/ profit attributable to equity 
  shareholders                               (426,148)        320,930   (1,107,854) 
 
 Weighted average number of Shares 
  in issue                                  21,032,030     21,032,030    21,032,030 
                                         -------------  -------------  ------------ 
 

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March 30, 2021 02:00 ET (06:00 GMT)

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