TIDMCMX
RNS Number : 2408L
Catalyst Media Group PLC
30 December 2022
30 December 2022
Catalyst Media Group Plc
("CMG", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2022
and Notice of Annual General Meeting
The Board of CMG (AIM: CMX) is pleased to announce the Company's
final results for its financial year ended 30 June 2022.
CMG is a 20.54% shareholder in Sports Information Services
(Holdings) Limited ("SIS") and the results for the year to 30 June
2022 incorporate its share in the profits/losses of SIS for its
financial year ended 31 March 2022, as an equity-accounted
associate.
Highlights :
-- CMG profit after taxation of GBP24.5 million further to a
reversal of historic impairment charges in respect of the carrying
value of the group's interest in SIS totalling GBP23.4 million
(2021: loss of GBP1.6 million with no impairment charge in respect
of the carrying value of the group's interest in SIS)
-- Profit per share of 116.28p (2021: loss per share of 7.51p)
-- Net asset value per share of 168.9p (2021: 52.3p)
-- For its financial year to 31 March 2022, SIS achieved:
o Turnover of GBP218.3 million (2021: GBP130.1 million)
o Operating profit prior to litigation fees of GBP9.2 million
(2021: restated loss of GBP7.5 million)
o Profit after taxation prior to litigation fees of GBP7.4
million (2021: restated loss after taxation prior to litigation
fees of GBP6.2 million)
-- On 18 November 2022, SIS declared an interim dividend of
GBP4.4 million and CMG has subsequently received its share of such
dividend
-- CMG currently intends to declare and pay a dividend of 3.3p
per share (2021: Nil). Further details of the record and payment
dates in respect of such planned dividend will be announced in due
course
SIS Current Trading and Outlook
SIS has started its new financial year well, and management
continues to pursue and win new business opportunities both in
terms of content acquisition, most recently securing new rights for
South African Horseracing, and new customers, with the most recent
deals announced being Spreadex in the UK and Estelarbet in South
America.
SIS has also recently launched the first of its esports
offerings in New Jersey with bet365 as its first customer which
marks another significant step in the further geographic
diversification of the business.
SIS has advised CMG that it expects to close its financial year
to March 2023 with increased turnover year-on-year.
SIS's cash position as of 1 December 2022 was approximately
GBP54m, following its recent dividend payment.
In November 2022 SIS engaged Oakvale Capital LLP to review
strategic options for the SIS business. The outcome of this review
process may include various courses of action for the future of the
business and once the SIS board has reached any conclusions an
appropriate announcement will be made by CMG.
Availability of Annual Report & Financial Statements and
Notice of Annual General Meeting
A PDF copy of the Company's full Annual Report and Financial
Statements for its financial year ended 30 June 2022, together with
the formal notice of Annual General Meeting ("AGM") and form of
proxy, will shortly be made available to download from the
Company's website at: www.cmg-plc.com.
The AGM is to be held at 6 Stratton Street, London, W1J 8LD at
11.00 a.m. on Wednesday, 1 February 2023.
Enquiries :
Catalyst Media Group plc
Michael Rosenberg, Non-executive Chairman Mob: 07785 727
Melvin Lawson, Non-executive Director 595
Tel: 020 7734
8111
Strand Hanson Limited Tel: 020 7409
James Harris / Matthew Chandler 3494
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
Key Extracts from the Company's audited Annual Report and
Financial Statements are set out below :
Chairman's Statement
I am pleased to present the results for Catalyst Media Group plc
("CMG" or the "Company") for the year ended 30 June 2022, which
incorporate our share of profits/losses for Sports Information
Services (Holdings) Ltd ("SIS") in which CMG has a 20.54%
interest.
The main asset of CMG continues to be its 20.54% shareholding in
SIS, as detailed further below. CMG equity accounts for its share
in the profits/losses of SIS.
After taking account of CMG's share in the profit (2021: loss)
of SIS for its year ended 31 March 2022 of GBP1.15 million (2021:
loss of GBP1.47 million), and a reversal of historic impairment
charges recognised against the carrying value of its interest in
SIS totalling GBP23.4m (2021: no impairment charge), CMG recorded a
profit before taxation of GBP24.4 million (2021: loss of GBP1.6
million). Net assets at the year end were GBP35.5 million (168.9p
per share) (2021: GBP11 million (52.3p per share)).
SIS - UK and Ireland Retail
SIS continues to provide its core service including Racecourse
Media Group horseracing, the SIS British Greyhound Service, Irish
Horseracing, Chelmsford City Horseracing, 49's and International
Horseracing to almost the entire 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 certain early morning and evening
time periods and has renewed several existing arrangements.
As the market recovered from the disruption caused by the
COVID-19 pandemic, the retail sector has seen the return of
customers following restrictions being lifted. In June 2021 SIS
strengthened its long-term position by securing a three-year
extension to the Retail media rights of the Racecourse Media Group
racecourses, through to March 2026.
SIS - International & Online
In the financial year under review, SIS has continued to expand
both the content and customer base for its 24/7 racing channels
covering horseracing, greyhound racing, virtual racing and mixed
channels and has improved the overall user experience. SIS has over
120 live feeds to customers designed to maximise betting
opportunities for international retail and online operators and has
signed numerous international and online operators to multi-year
agreements. SIS continues to progress its strategy to increase
distribution, in both new and existing international and online
markets, using proprietary production technology as well as
ultra-low latency streaming and data pricing services.
During the year, SIS set up a US subsidiary and is applying for
licences to supply both esports and racing in a number of states
where regulations allow.
The SIS Competitive Gaming (e-sports) service, launched in the
previous financial year, has continued to attract new customers and
the service now has three live titles covering e-football,
e-basketball and the Counter Strike:Global Offensive (CS:GO) game.
It provides over 100,000 unique events per annum with plans
underway to increase this number further.
Since the acquisition of the 49's Limited business in 2020 the
online presence of the 49's ball draw and virtuals products has
grown significantly and two new draw products, Fast 15's and 39's,
have been launched in the year, thereby increasing the number of
live draws available under the brand to over 200,000 events per
annum.
As previously reported in June 2021, SIS completed an initial
investment in, and long-term partnership arrangement with, Racelab
Pty Limited, a racing data science company in Australia, which
added a range of market leading products across the SIS portfolio
of international horse and greyhound racing and expanded the range
of trading products available for online customers internationally
and in the UK. In November 2022, SIS executed its option to
increase its stake in Racelab Pty Limited to 50%.
SIS Results
As announced on 21 November 2022, the final result for its year
ended 31 March 2022 was a profit before tax of GBP7.0 million, the
main driver for the increase in profitability being due to a return
to normal trading following the COVID-19 pandemic abating and the
expansion of SIS's online customer base.
SIS's cash balance on 31 March 2022 was approximately GBP62.8
million, an increase on the prior year due to its return to
profitability and a normal working capital position after the
pandemic disruption. On 18 November 2022 SIS declared an interim
dividend of GBP4.4m and CMG has since received its share of such
dividend.
The results of SIS for its year ended 31 March 2022 were as
follows:
As restated **
31 March 2022 31 March 2021
Before Before
individually Individually individually Individually
significant significant significant significant
items* Items* Total items* Items* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Turnover 218,349 - 218,349 130,107 - 130,107
Operating expenses (209,290) (2,200) (211,490) (139,425) (622) (140,047)
Other operating income 105 - 105 1,863 - 1,863
--------------- -------------- ----------- --------------- -------------- -----------
Group operating profit
/ (loss) 9,164 (2,200) 6,964 (7,455) (622) (8,077)
Other interest receivable
and similar income 275 - 275 310 - 310
Interest payable and
similar expenses (277) - (277) (3) - (3)
--------------- -------------- ----------- --------------- -------------- -----------
Profit / (loss) before
taxation 9,162 (2,200) 6,962 (7,148) (622) (7,770)
Tax on (profit) / loss (1,762) 418 (1,344) 935 118 1,053
--------------- -------------- ----------- --------------- -------------- -----------
Profit / (loss) after
taxation 7,400 (1,782) 5,618 (6,213) (504) (6,717)
--------------- -------------- ----------- --------------- -------------- -----------
Other comprehensive
income 330 - 330 (917) - (917)
--------------- -------------- ----------- --------------- -------------- -----------
Total comprehensive
income 7,730 (1,782) 5,948 (7,130) (504) (7,634)
--------------- -------------- ----------- --------------- -------------- -----------
Notes :
* - Individually significant items relate to litigation
fees.
** - The accounts were restated to reflect the capitalisation of
new product and IT development costs. The impact on the prior year
profit before tax was GBP0.8m (Loss of GBP7.8m) versus that
previously reported (being a loss of GBP8.6m). CMG's financial
statements have not been restated to reflect such amendment as the
impact is immaterial.
Share of assets and liabilities
of associate As restated
31 March 2022 31 March 2021
Gross assets 126,605 102,135
Gross liabilities (66,293) (47,771)
------------- -------------
Net assets 60,312 54,364
------------- -------------
India
An arbitration award was made in July 2020 which the respondent
has paid into court. These funds are now subject to appeals in the
Delhi High Court by both parties: SIS continues to pursue claims
disallowed by the arbitrators whilst the respondent attempts to
nullify the award in its entirety. The overall outcome therefore
remains uncertain.
The legal and associated costs relating to this claim have been
significantly reduced but are still impacting profits.
Litigation
As previously announced on 9 October 2020, in the claim 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. The Court of
Appeal:
(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.
The Court of Appeal was concerned only with the appeals on the
liability findings and consequently made no ruling as to
damages.
SIS had applied to the Supreme Court and was granted an appeal
hearing in June 2022, however, the Company was informed that the
case between SISL and TRP had instead been resolved amicably prior
to such hearing occurring and that the precise terms of the
resolution were confidential between the parties.
SIS Current Trading and Outlook
SIS has started its new financial year well, and management
continues to pursue and win new business opportunities both in
terms of content acquisition, most recently securing new rights for
South African Horseracing, and new customers, with the most recent
deals announced being Spreadex in the UK and Estelarbet in South
America.
SIS has also recently launched the first of its esports
offerings in New Jersey with bet365 as its first customer which
marks another significant step in the further geographic
diversification of the business.
SIS has advised CMG that it expects to close its financial year
to March 2023 with increased turnover year-on-year.
SIS's cash position as of 1 December 2022 was approximately
GBP54m, following its recent dividend payment.
CMG's outlook and Annual General Meeting
The Directors consider that the most appropriate treatment for
the Group's investment in its associate, SIS, as at 30 June 2022 is
to reverse historic impairments recognised against the carrying
value of the investment totalling GBP23.4m to increase its value at
30 June 2022 to GBP35.43m.
The Directors consider that at 30 June 2022 there are
significant indicators that a material reversal of previously
recognised impairments should be recorded. Following the resolution
of the TRP litigation during the current financial period and based
on the return to profitability of SIS, the extension of core RMG
horseracing rights, and the optimism around the prospects for
future trade, the Directors expect the performance of SIS to
strengthen in future financial periods and consider that valuation
methodologies such as the comparable company model, and discounted
cashflow analysis are sufficiently reliable to report a revised
carrying value for the investment.
In the prior year, during a period when COVID-19 was still a
factor, the TRP litigation was pending resolution and RMG
horseracing rights had not yet been renewed, there was significant
uncertainty around the outlook for SIS such that the range of
valuations indicated by comparable company or discounted cashflow
models did not give the Directors a sufficiently reliable estimate
of the value of CMG's interest in its equity. The Directors
therefore assessed at 30 June 2021 that the net asset value of SIS
was the most reliable indicator of the value of CMG's
investment.
In the current financial period, and prompted by the expectation
of SIS's improving future performance, the directors have chosen to
use the comparable company methodology using an appropriate EBITDA
multiple to assess the recoverable value of the investment and to
determine the value of previously recognised impairment to be
reversed, as disclosed above. The Directors consider the comparable
company valuation methodology to be more appropriate than other
methods.
For further details in respect of the judgments and estimation
techniques used by the Directors in their assessment, please refer
to notes 1 and 2 in the full annual report and financial
statements.
While there can be no certainty of the potential realisation
value of this asset, it is the reasonable belief and judgement of
the Directors based, inter alia, on extensive discussions with
SIS's management and a review of its strategic plans and current
and forecast trading, that it is appropriate to reverse previous
impairments to the carrying value of the asset.
While the auditors have included an emphasis of matter paragraph
to draw attention to the judgements made in respect of this
valuation and identify the factors to be considered including the
possible risks in making such a change, the Board is confident that
it has taken full account of the background facts that have led to
this change and believe that the valuation of the business fully
supports the reversal of previous impairments.
CMG continues to be cash positive with relatively low overheads.
As stated above, SIS declared an interim dividend totalling GBP4.4m
on 18 November 2022. Accordingly, having received the Company's
share of this dividend, the board of CMG currently intends, in
turn, to declare and pay a dividend of 3.3p per share to CMG's
shareholders, with the balance being retained for general working
capital purposes. Further details of the precise record and payment
dates will be announced in due course.
In November 2022 SIS engaged Oakvale Capital LLP to review
strategic options for the SIS business. The outcome of this review
process may include various courses of action for the future of the
business and once the SIS board has reached any conclusions an
appropriate announcement will be made by CMG.
The next Annual General Meeting of CMG will take place on
Wednesday, 1 February 2023. Formal notice of the meeting is set out
at the end of the annual report and financial statements together
with a form of proxy.
Michael Rosenberg, OBE
Chairman
29 December 2022
Strategic Report
The Directors present their strategic report for the year ended
30 June 2022.
Principal activities and review of the business
The principal activities of the business are outlined in the
Chairman's Statement. A review of the business is also included
within the Chairman's Statement.
Principal risks and uncertainties
Investment in SIS
The principal strategic investment of the Group is its 20.54%
shareholding in SIS. The Group is entitled to appoint one director
to the board of SIS which currently comprises nine directors, of
which five are appointed by shareholders, two are independent and
one is the Chairman. Although it can influence the board on
strategic decisions, the Group is not in a position to control the
day-to-day business and affairs of SIS other than with the support
of other directors and a majority of the shareholders of SIS.
There are a number of risks and uncertainties associated with
the business of SIS which could potentially have an adverse impact
on the value of the Group's investment. At a technical level this
includes the fact that the customers of SIS rely upon real time
data and uninterrupted content delivery. Loss of content would
result in reduced quality of services and potentially reduced
income. SIS has therefore adopted advanced disaster recovery
solutions and has built back up facilities which are located around
the UK.
Financial risk
The Group is subject to financial risk through its exposure to
financial assets and liabilities. The Group's main financial risk
is its exposure to its investment in SIS.
Credit risk
The Group is not exposed to any credit risk.
Liquidity risk
There is a very low risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due,
on the basis that the Group operates with minimal overheads and
cash flow is well managed.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. The principal liabilities of the Group and Company
arise in respect of administrative expenditure and trade and other
payables. Trade and other payables are all payable within three
months.
The Board receives cash flow projections on a regular basis as
well as information on cash balances.
Key Performance Indicators (KPIs)
The Company's key performance indicators used by the Board in
monitoring the general performance of the Group and its investments
are:
Net asset value per share
The net asset value per share of the Group was approximately 169
pence as at 30 June 2022 (2021: 52 pence). The net asset value per
share has therefore increased during the year to 30 June 2022. The
net asset value of the Group as at 30 June 2022 and 30 June 2021 is
shown in the Group's consolidated statement of financial
position.
Administrative expenses
The Directors closely monitor the anticipated overheads for the
Group and ensure that these are kept to a minimum.
Earnings per share (EPS)
EPS shows the relative performance year-on-year of the Group's
profitability measured as an amount of profit or loss attributable
to one ordinary share. The calculation of earnings per share is
based on the weighted average number of ordinary shares in issue
for the financial year concerned and the profit/(loss) after
taxation attributable to ordinary shareholders. EPS in respect of
operations for the year and the prior financial year is shown in
the Group consolidated statement of comprehensive income.
Key Performance Indicators of Associate
The Directors additionally monitor the performance of SIS in
order to evaluate the general performance of the Group. The
Directors consider that group turnover, group operating profit
percentage before individually significant items, net cashflow from
operating profits and average number of employees are of most
significance in evaluating the performance of the Group. The 2022
financial results of SIS are disclosed in the Chairman's
Statement.
s172 Statement
CMG's directors are mindful of their responsibilities under
section 172 of the Companies Act 2006 to promote the success of the
business through operating in accordance with good corporate
practice and with considered engagement with the Group's
stakeholders. Several of the Group's major shareholders are also
directors of the Group and are therefore actively involved in all
key decision-making. Please refer to the Corporate Governance
Statement in the full Annual Report and Financial Statements for
further details of engagement with stakeholders.
The board of directors regularly review and identify other
principal stakeholders of the business, and decisions in respect of
the Group's activities are made only after reviewing, and
discussing, the potential impact on such stakeholders. Furthermore,
in terms of engagement with the Group's suppliers, the directors
continue to actively monitor ethical standards and environmental
issues to ensure that the wider business is compliant with global
standards.
Michael Rosenberg, OBE
Chairman
29 December 2022
Consolidated statement of comprehensive income for the year
ended 30 June 2022
Year Year
ended Ended
30 June 30 June
2022 2021
GBP GBP
----------- ------------
Revenue 25,000 25,000
Administrative expenses (137,859) (130,029)
----------- ------------
Operating loss (112,859) (105,029)
Financial income 36 23
Financial costs - -
----------- ------------
Net financial income 36 23
Share of profit/(loss) of equity-accounted
associate, net of tax 1,153,937 (1,470,048)
Reversal of impairment of equity-accounted 23,391,701 -
associate
Profit/(loss) before taxation 24,432,815 (1,575,054)
----------- ------------
Taxation 23,957 (4,934)
Profit/(loss) for the year 24,456,772 (1,579,988)
----------- ------------
Share of other comprehensive profit/(loss)
of associate 67,782 (188,352)
Total comprehensive profit/(loss)
for the year 24,524,554 (1,768,340)
----------- ------------
Attributable to equity holders of
the Company 24,524,554 (1,768,340)
----------- ------------
Profit/(loss) per share:
Basic 116.28p (7.51p)
----------- ------------
Diluted 116.28p (7.51p)
----------- ------------
The above Consolidated Statement of Comprehensive Income should
be read in conjunction with the accompanying notes in the Company's
full Annual Report and Financial Statements.
Consolidated statement of financial position as at 30 June
2022
30 June 30 June
2022 2021
GBP GBP
----------- -----------
Assets
Non-current assets
Investment in associate 35,430,000 10,816,580
35,430,000 10,816,580
----------- -----------
Current assets
Trade and other receivables 56,953 57,312
Cash and cash equivalents 93,011 167,830
149,964 225,142
----------- -----------
Total assets 35,579,964 11,041,722
----------- -----------
Equity and liabilities
Capital and reserves attributable to equity holders of the parent
Share capital 2,103,202 2,103,202
Capital redemption reserve 711,117 711,117
Merger reserve 2,402,674 2,402,674
Retained profits 30,310,114 5,785,560
Total equity 35,527,107 11,002,553
----------- -----------
Current liabilities
Trade and other payables 52,857 39,169
Total equity and liabilities 35,579,964 11,041,722
----------- -----------
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes in the Company's
full Annual Report and Financial Statements.
Consolidated statement of changes in equity for the year ended
30 June 2022
Attributable to equity holders of the Group
Capital Total
Share Share Redemption Merger Retained Shareholders
30 June 2022 Capital Premium Reserve Reserve Profits Equity
GBP GBP GBP GBP GBP GBP
At 1 July 2021 2,103,202 - 711,117 2,402,674 5,785,560 11,002,553
Profit for the year - - - - 24,456,772 24,456,772
Other comprehensive
income:
Share of other comprehensive
profit of associate - - - - 67,782 67,782
---------- --------- ------------ ---------- ----------- --------------
Total comprehensive
profit for the period - - - - 24,524,554 24,524,554
At 30 June 2022 2,103,202 - 711,117 2,402,674 30,310,114 35,527,107
---------- --------- ------------ ---------- ----------- --------------
The following describes the nature and purpose of each reserve
within owners' equity:
Share capital Amount subscribed for shares at nominal
value.
Share premium Amount subscribed for share capital in
excess of nominal value.
Capital redemption Amounts arising from the purchase by the
reserve group of its own shares.
Merger reserve Amounts arising from the merger of subsidiary
investments.
Retained profits Cumulative profit of the Group attributable
to equity shareholders.
Attributable to equity holders of the Group
Capital Total
Share Share Redemption Merger Retained Shareholders
30 June 2021 Capital Premium Reserve Reserve Profits Equity
GBP GBP GBP GBP GBP GBP
At 1 July 2020 2,103,202 - 711,117 2,402,674 7,553,900 12,770,893
Loss for the year
2021 - - - - (1,579,988) (1,579,988)
Other comprehensive
income
Share of other comprehensive
loss of associate - - - - (188,352) (188,352)
---------- --------- ------------ ---------- ------------ --------------
Total comprehensive
loss for the period - - - - (1,768,340) (1,768,340)
At 30 June 2021 2,103,202 - 711,117 2,402,674 5,785,560 11,002,553
---------- --------- ------------ ---------- ------------ --------------
Consolidated statement of cash flows for the year ended 30 June
2022
Year ended Year ended
30 June 30 June
2022 2021
GBP GBP
------------- ------------
Cash flow from operating activities
Profit/(loss) before taxation 24,432,815 (1,575,054)
Adjustments for:
Share of (profit) / loss from associate (1,153,937) 1,470,048
Reversal of impairment of investment in associate (23,391,701) -
Finance income (36) (23)
Corporation taxes recovered - 29,941
Net cash flow used in operating activities before changes in working capital (112,859) (75,088)
Decrease / (increase) in trade and other receivables 24,316 (29,446)
Increase in trade and other payables 13,688 1,687
Net cash flow used in operating activities (74,855) (102,847)
Investing activities
Dividend received - -
Interest received 36 23
Net cash flow from investing activities 36 23
Financing activities
Dividends paid - -
Net cash flow used in financing activities - -
Net decrease in cash and cash equivalents in the year (74,819) (102,824)
Cash and cash equivalents at the beginning of the year 167,830 270,654
------------- ------------
Cash and cash equivalents at the end of the year 93,011 167,830
------------- ------------
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes in the Company's full
Annual Report and Financial Statements.
Notes to the consolidated financial information
1. Basis of preparation and significant accounting policies
The consolidated financial information set out above does not
constitute the Group's financial statements for the years ended 30
June 2022 or 30 June 2021 but is derived from those financial
statements. Statutory financial statements for 2021 have been
delivered to the Registrar of Companies and those for 2022 have
been approved by the board and will be delivered in due course. The
auditors have reported on the 2022 and 2021 financial statements
which carried unqualified audit reports and did not contain a
statement under section 498(2) or 498(3) of the Companies Act 2006.
The 2022 financial statements included reference to a matter to
which the auditors drew attention by way of emphasis, namely the
reversal of previously recognised impairment charges against the
carrying value of the Group's investment in an associate (Sports
Information Services (Holdings) Limited). Notes 1 and 2 of the full
Annual Report and Financial Statements disclose judgements applied
by the Directors in determining the appropriate carrying value of
the investment, the basis on which the value was determined and
that there is estimation uncertainty concerning the use of Level 2
and Level 3 inputs in making this assessment. The auditor's opinion
was not modified in respect of such matter. The 2021 financial
statements did not include a reference to any matters to which the
auditor drew attention by way of emphasis.
While the financial information included in this announcement
has been compiled in accordance with, inter alia, International
Financial Reporting Standards (IFRS), this announcement does not in
itself contain sufficient information to comply with IFRS. The
accounting policies used in the preparation of this announcement
are consistent with those in the full financial statements
including those applicable to SIS, given its materiality to the
Group as a whole.
CMG is an AIM quoted public limited company registered in
England and Wales where it is domiciled for tax purposes. Its
financial statements are prepared under the historical cost
convention.
Going concern
The directors can report that based on the Group's budgets and
financial projections, they have satisfied themselves that the
business is a going concern covering a period of at least twelve
months from the date of approval of the financial statements. In
assessing the Group as a going concern, the directors are also
mindful of the business of SIS that provides the entire value of
the Group. The directors are satisfied that SIS is a going concern.
The Board has a reasonable expectation that the Company and its
Group have adequate resources and facilities to continue in
operational existence for the foreseeable future and the accounts
are subsequently prepared on a going concern basis.
2. Investment in associate
Year Ended 30 June 2022 Group
GBP
Cost
At 1 July 2021 10,816,580
Share of profit - 2022 1,153,937
Share of other comprehensive
income - 2022 67,782
Dividend received - 2022 -
Reversal of impairment of equity-accounted
associate 23,391,701
At 30 June 2022 35,430,000
Year Ended 30 June 2021 Group
GBP
Cost
At 1 July 2020 12,474,980
Share of loss - 2021 (1,470,048)
Share of other comprehensive
loss - 2021 (188,352)
Dividend received - 2021 -
Impairment of equity-accounted -
associate
-----------
At 30 June 2021 10,816,580
-----------
The Group's interest in its associate, SIS, a company
incorporated in England and Wales, is held by Alternateport
Limited. Alternateport Limited 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 Limited is a wholly
owned subsidiary of Catalyst Media Holdings Limited, a wholly owned
subsidiary of Catalyst Media Group plc.
A copy of the strategic forecasts prepared by SIS was made
available to the Directors of CMG showing management forecasts of
the income statement, statement of financial position and
statements of cash flow. SIS's management have assumed a growing
level of future profits at a steady rate over a period of five
years. CMG's management have made reference to SIS's most recently
reported EBITDA, with adjustments made for exceptional and
non-recurring items, while also considering the sustainability of
its financial performance.
The Directors of CMG believe that as at 30 June 2022 there were
significant impairment reversal indicators, including the expected
future growth of SIS, the extension of core RMG horseracing rights,
and the optimism around the prospects for future trade. The
directors therefore believe that an enterprise method of valuation
of CMG's investment in SIS would be an appropriate methodology to
follow. The directors have identified an adjusted EBITDA figure for
SIS for the twelve month period to 30 June 2022 which excluded the
impact of certain non-recurring and non-trade items. An appropriate
EBITDA multiple was obtained through comparisons of multiples used
by businesses in comparable sectors. An average of the mean and
median multiples was used. An illiquidity discount of 20% was then
applied to the valuation in the midpoint of the range of
illiquidity discounts identified by the Directors for unlisted
businesses.
After following the methodology described above, the Directors
concluded that the carrying value of the investment in SIS should
be GBP35.43m and have therefore reversed historic impairments
recorded against the value of the investment in previous years
totalling GBP23.39m. The Directors consider that the value at 30
June 2022 is appropriate based on the strategic plans of SIS.
Share of profit of
associate
2022 2022 2021
CMG share CMG share
SIS Total
GBP'000 GBP'000
GBP'000
Revenue 218,349 44,849 26,724
---------- ----------- ----------
Operating profit / (loss)
before individually
significant items 9,164 1,882 (1,704)
Net interest receivable (2) - 63
Individually significant
items (2,200) (452) (128)
Profit / (loss) before
tax 6,962 1,430 (1,769)
Taxation (1,344) (276) 299
---------- ----------- ----------
Share of profit / (loss)
after taxation 5,618 1,154 (1,470)
---------- -----------
Net income from associate 5,618 1,154 (1,470)
Other comprehensive
income:
Actuarial (loss) / gain 507 104 (290)
Deferred tax (177) (36) 101
330 68 (188)
Share of assets and
liabilities of associate
Gross assets 126,605 26,005 20,629
Gross liabilities (66,293) (13,617) (9,812)
---------- ----------- ----------
Share of Net Asset Value 60,312 12,388 10,817
---------- ----------- ----------
An arbitration award was made in July 2020 which the respondent
has paid into court. These funds are now subject to appeals in the
Delhi High Court by both parties: SIS continues to pursue claims
disallowed by the arbitrators whilst the respondent attempts to
nullify the award in its entirety. The overall outcome therefore
remains uncertain.
The legal and associated costs relating to this claim have been
significantly reduced but are still impacting profits.
As previously announced on 9 October 2020, in the claim 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. The Court of
Appeal:
(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.
The Court of Appeal was concerned only with the appeals on the
liability findings and consequently made no ruling as to
damages.
SIS had applied to the Supreme Court and was granted an appeal
hearing in June 2022, however, the Company was informed that the
case between SISL and TRP had instead been resolved amicably prior
to such hearing and that the precise terms of the resolution were
confidential between the parties.
3. Post balance sheet events
In November 2022 SIS engaged Oakvale Capital LLP to review
strategic options for the SIS business. The outcome of this review
process may include various courses of action for the future of the
business and once the SIS board has reached any conclusions an
appropriate announcement will be made by CMG.
SIS declared an interim dividend totalling GBP4.4m on 18
November 2022. Accordingly, having received the Company's share of
this dividend, the board of CMG currently intends, in turn, to
declare and pay a dividend of 3.3p per share to CMG's shareholders,
with the balance being retained for general working capital
purposes. Further details of the precise record and payment dates
will be announced in due course.
See note 2 of the full Annual Report and Financial Statements
for a description of the impact of the post balance sheet events as
they relate to SIS's reporting date (31 March 2022) on the Group's
valuation of its investment in associate as at 30 June 2022.
- ENDS -
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END
FR UKUSRUSUUUAA
(END) Dow Jones Newswires
December 30, 2022 02:00 ET (07:00 GMT)
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