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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Catalyst Media Group Plc | LSE:CMX | London | Ordinary Share | GB00B282R334 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 70.00 | 65.00 | 75.00 | 70.00 | 70.00 | 70.00 | 0.00 | 07:38:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computers & Software-whsl | 25k | 2.61M | 0.1243 | 5.63 | 14.72M |
From May 2022 to May 2024
TIDMCMX
RNS Number : 2408L
Catalyst Media Group PLC
30 December 2022
30 December 2022
Catalyst Media Group Plc
Hot Features
Premium
("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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December 30, 2022 02:00 ET (07:00 GMT)
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