Trading Statement

RNS Number : 4167Q

Catalyst Media Group PLC

19 October 2011

 



Catalyst Media Group Plc

("CMG" or the "Company")

Trading Statement

The Board of Catalyst Media Group ("CMG") is pleased to release the following trading update covering the 15 month accounting period to 30 June 2011.

The primary activity of the Group is the holding of a 20.54% share in Satellite Information Services (Holdings) Limited ("SIS").   SIS's latest accounting year ended on 31 March 2011 and the audited accounts for CMG for the period to 30 June 2011 will include its share of the profits of SIS to 31 March 2011 as an equity accounted associate.

SIS has now finalised its accounts for the year ended 31 March 2011 and the following statement is given based on its audited figures for that accounting year.  CMG anticipates announcing its final results for the 15 month period to 30 June 2011 around mid November 2011, following completion of the audit of the Company subsequent to the receipt of the audited accounts of SIS.

For the year ended 31 March 2011, SIS generated turnover of £256 million (2010: £198 million). The profit of SIS for the year has been impacted by a provision of £5.9 million deemed necessary in connection with its contract covering the Commonwealth Games in India in 2010, and also by start up costs of £855,000 relating to the joint venture with Peel Media Services (Studios) Ltd to manage the studios and all post production, content and technical services at Media City in Salford.  Prior to these provisions, operating profit before interest and tax for the year was £22.8 million compared to £24.7 million in the previous year. Net profit before taxation, including all provisions was £13.5 million (2010: £23.3 million) with profit after tax of £9.1 million (2010: £15.7 million).

Growth in turnover of SIS for the year to 31 March 2011 was 29.0% compared to 2.7% in 2010.  The most significant drivers for the increase in revenue during 2011 relate to revenues from the Commonwealth Games contract with the outside broadcasting ("OB") division SIS OB and content price increases for licensed betting office subscribers and additional BBC and non-BBC revenue.

The SIS group operating profit margin decreased in 2011 to 6.6% from 12.5% in the previous year primarily due to the provision of £5.9 million relating to the Commonwealth Games contract referred to above. Net debt at the year end was £27.1 million compared to £28.5 million for the previous year.

SIS continues to trade profitably in the current year and is ahead of internal budget expectations. Based on current trading and subject to there being no unforeseen events arising during the remainder of the financial year, management expects operating profits prior to exceptional items, including relocation costs referred to below, for the year to 31 March 2012 to show an improvement over those achieved for the year ended 31 March 2011.

Following the award of the Commonwealth Games contract in October 2009 a partnership in the name of SIS LIVE was set up in January 2010 by Satellite Information Services Ltd and SIS Outside Broadcasts Ltd as a special purpose vehicle to deliver the host broadcast production and facilities contract for the Games in India during October 2010. Whilst TV coverage was concluded successfully (and has generated plaudits from the International television community) due to post Games developments in India beyond SIS's control approximately 40% of amounts still owing under the contract have  not been paid. A corresponding proportion has been withheld by SIS Live from its principal Indian subcontractor and legal proceedings have been initiated to recover the outstanding payment from the Indian broadcaster. As a result of these ongoing discussions, the provision referred to above of £5.9 million has been recognised in the accounts of SIS.

SIS continues with its long-established business of providing integrated television and information services delivered via satellite to licensed betting offices in the UK, Ireland and overseas and the provision of television production services for other broadcasters.  SIS now holds long term media rights representing in excess of 50% of all UK horse racing fixtures.  This ensures the supply of images and data from the coverage of horse racing fixtures at racecourses owned by Arena Leisure plc and Northern Racing Ltd until 2016 and 2017, respectively. Approximately 48% of  total revenues were derived from these activities.

On 5 July 2010, SIS entered into a joint venture agreement with Peel Media Services (Studios) Ltd to form MediaCity Studios Ltd. This company commenced trading in December 2010 and provides studio, technical and production facilities at Media City in Salford Quays, Manchester. The company currently has a contractual relationship with Peel Media Services (Studios) Ltd for provision of services to the BBC. The contract is for an initial period of ten years with an option to extend. 

SIS has announced plans to relocate its London operation and some of its Milton Keynes operations to MediaCityUK in Salford. This move is expected to be completed by 2013 and will involve further capital expenditure and certain non recurring operational costs.

The dividend policy of SIS is to distribute 50% of profits after taxation each year subject to cash flow considerations. However, in the light of investment plans that are still under review by the SIS board no decisions have yet been made with regard to the timing or quantum of the next dividend payment. 

Overheads of CMG continue at a low level being approximately £220,000 per annum excluding interest payments. Bank facilities have been negotiated to ensure the Group  has sufficient funds available pending any decisions with regard to the timing of dividend payments from SIS.

Currently borrowings stand at approximately £650,000 and CMG has no other major liabilities.

Based on the audited accounts of SIS for the 12 months ended 31 March 2011, the unaudited profits before taxation of CMG for the 15 months ended 30 June 2011 are estimated to be approximately £2.3 million (2010: £3.3 million).

For further information, please contact:

CMG:

Michael Rosenberg

[phone]

Non Executive Chairman

Melvin Lawson

[phone]

Non-Executive Director:          

Strand Hanson Limited

[phone]

James Harris

Angela Peace

 

END

 

 

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