TIDMPRO
RNS Number : 2300C
Progressive Digital Media Group PLC
03 March 2011
3 March 2011
Progressive Digital Media Group plc
Preliminary Results For The Year Ended 31 December 2010
Progressive Digital Media Group Plc ("Progressive", the
"Business" or the "Group") produces premium business information,
research services and marketing solutions for senior level decision
makers.
Highlights
Key achievements in 2010
-- Focused Group on Business Intelligence and B2B digital
revenues
-- Ongoing investment in our sales headcount, content and
delivery platforms
-- Group is now well placed to deliver both revenue growth and
improved margins
Financial performance
-- Group is profitable and recording good growth across a broad
base of revenue streams
-- Group revenue increased by 29.4% to GBP48.0m (2009:
GBP37.1m)
-- Adjusted EBITDA(1) increased by 186.4% to GBP3.8m (2009:
GBP1.3m)
-- EBITDA(2) increased by 287.8% to GBP2.3m (2009: GBP0.6m)
-- Amortisation and other adjusting items have led to a reported
loss before tax of GBP4.6m (2009: loss before tax of GBP3.0m)
Our business
-- Focused on high growth digital media sectors
-- Focused on providing high-value digital content
-- Has clear growth opportunities and a proven and experienced
management team
Simon Pyper, CEO of Progressive Digital Media Group plc,
commented:
"A pleasing set of results delivered not only during a period of
both change and investment for the Group, but also in an
environment of protracted economic somnolence. Furthermore, our
results do not as yet fully reflect the expected benefits from
either the significant investments we have made or from the
efficiencies we have achieved through the introduction and
integration of common processes and systems. We anticipate that the
full year results for both 2011 and 2012 will reflect that we are
continuing to invest across the Group to facilitate accelerated
future growth.
The Board believes this has been a year of significant progress
and is confident of the long-term profitable prospects of the
Group."
Note 1: Adjusted EBITDA: EBITDA adjusted for costs associated
with derivatives, acquisitions, integration and restructure of the
Group.
Note 2: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment.
Enquiries:
Progressive Digital Media Group plc 0207 936 6400
Mike Danson, Chairman
Simon Pyper, CEO
www.progressivedigitalmediagroup.com
Investec Investment Banking, NOMAD and Broker 0207 597 4000
David Currie
David Flin
Hudson Sandler 0207 796 4133
Nick Lyon
Charlie Jack
CHAIRMAN'S STATEMENT
Over the last two years we have overcome significant challenges
and implemented major change programmes as we brought together the
various companies in the Group and refocused them on our key
markets. With the final integration and reorganisation of our
Digital Marketing business now behind us and the introduction of
common processes and systems complete, the Group now has the solid
base in place which will allow us to accelerate our growth.
Our Business Model
We have a simple business model which is designed to generate
revenues off a relatively fixed operating cost base allowing for
operational gearing to drive growth and margin. Its key features
are:
1. A strong and scalable asset base
2. Annualised and digital revenue streams
3. Global coverage and positioned at the premium end of the
market
4. Clear growth opportunities, both organic and through
acquisition
Our Strategy
Our strategy is to focus on:
1. Key, high growth B2B markets
2. Digital subscription based content which can be leveraged
across multiple platforms
3. Quality product and customer delivery
4. Controlling costs and improving productivity
The strategy will be delivered by a combination of strong
organic growth and selective acquisitions in our target markets.
Consistent with this, in September of 2010 the Group acquired
Canadean which is a leading provider of business and market
intelligence to the global consumer products market. The business
has performed well since acquisition and in line with our
expectations.
Board Changes
Canadean's former Chairman, Kelsey van Musschenbroek, joined the
Board of Progressive as a Non-Executive Director on 1 September
2010.
Outlook
We expect to make further progress in 2011. Whilst the economic
climate remains unpredictable, we are confident that we are well
placed to not only benefit from any cyclical upturn, but more
importantly, also from the investment we have made in our people,
our products and our delivery platforms.
I am committed to the long-term development of this company and
am confident that the investments we have made and plan to make in
our business model will allow the Group to deliver on its
strategy.
Mike Danson
Chairman
3 March 2011
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
A pleasing set of results delivered not only during a period of
both change and investment for the Group, but also in an
environment of protracted economic somnolence. Furthermore, our
results do not as yet fully reflect the expected benefits from
either the significant investments we have made or from the
efficiencies we have achieved through the introduction and
integration of common processes and systems. We anticipate that the
full year results for both 2011 and 2012 will reflect that we are
continuing to invest across the Group to facilitate accelerated
future growth.
Key achievements delivered in 2010 have been:-
1. The acquisition and successful integration of Canadean, a
leading provider of business and market intelligence to the global
consumer products market.
2. The opening of new offices in San Francisco and Sydney, the
benefits of which have yet to be seen in this year's financial
performance.
3. The delivery of new content and web platforms in late summer
of 2010 which are now being rolled out across the Group. This will
enable content to be leveraged across multiple formats and
distributed globally.
4. Digital Marketing re-structured and re-focused on B2B
market.
5. Back office rationalised with employees relocated to head
office.
This represents a major re-engineering of the whole Group and
has been done to not only be more efficient in what we do but also
to create the capacity for significant future growth.
Group Performance
Financially, the Group has performed well and is profitable at
the EBITDA(1) and Adjusted EBITDA(2) level. We have increased
revenues and improved EBITDA margins. Loss before tax was GBP4.6
million (2009: loss GBP3.0m), which includes redundancy costs of
GBP1.1 million (2009: GBP0.6 million), an amortisation charge of
GBP3.4 million (2009: GBP2.8 million) and an impairment charge of
GBP2.8 million (2009: Nil).
Profit bridge 2010 2009
Continuing operations GBP000s GBP000s
Revenue 47,986 37,084 +29.4%
Loss before tax (4,554) (2,957)
Depreciation 640 436
Amortisation 3,361 2,795
Impairment 2,820 -
Other income (174) -
Finance costs 253 331
-------------------------------- -------- -------- ---------
EBITDA 2,346 605
Redundancy 1,063 634
Property related provisions (57) 76
Revaluation of currency collar 248 -
Deal costs 224 20
-------------------------------- -------- -------- ---------
Adjusted EBITDA 3,824 1,335 + 186.4%
-------------------------------- -------- -------- ---------
Adjusted EBITDA % 8.0% 3.6%
-------------------------------- -------- -------- ---------
Note 1: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment.
Note 2: Adjusted EBITDA: EBITDA adjusted for costs associated
with derivatives, acquisitions, integration and restructure of the
Group.
Despite the reported loss for the period, the underlying
business is profitable with good opportunities for long-term
profitable growth in terms of further growth in sales and
improvement in margins.
Divisional performance:
Business Information
Business Information is predominately focused on the B2B space,
providing content rich web based information products. Business
Information's results include four months contribution from
Canadean which was acquired in September 2010.
Revenues for the year are GBP39.5 million (2009: GBP33.4
million) generating a contribution of GBP13.1 million.
Digital Marketing
Digital Marketing now focused on B2B market and providing
innovative, online digital marketing, research and panel
solutions.
Revenues for the year are GBP8.5 million (2009: GBP3.6 million)
generating a contribution of GBP2.3 million.
Financial Review
Adjusted Earnings Before Interest, Taxation, Depreciation and
Amortisation (EBITDA), adjusted for the costs associated with
derivatives, acquisitions, integration and restructuring of the
Group, improved to GBP3.8 million for the year (2009: GBP1.3
million). Reported EBITDA increased to GBP2.3 million for 2010 from
GBP0.6 million for 2009.
Capital Expenditure
Capital expenditure was GBP2.5 million for 2010. This included
GBP1.0 million on a one-off investment relating to Progressive's
new Content and Web Platforms. GBP1.2 million related to fit out of
Progressive's new offices in London, San Francisco and Sydney and
the associated IT equipment.
Financing
As at 31 December 2010, the Group had net debt of GBP24.5
million (2009: GBP14.8 million). The principal source of financing
for working capital requirements is an overdraft facility of
GBP7.0m of which GBP6.5 million was utilised at 31 December 2010.
Borrowings of GBP18.4 million consist of shareholder loans provided
by Michael Danson. Of this, GBP8.5 million is in relation to the
acquisition of Canadean.
The Group is reviewing its financing options and looking to move
towards a more traditional debt to equity model.
Outlook
The Board believes this has been a year of significant progress
and is confident of the long-term profitable prospects of the
Group
Simon Pyper
Chief Executive
3 March 2011
Consolidated Income Statement
Notes 2010 2009
GBP000s GBP000s
Continuing operations
Revenue 3 47,986 37,084
Cost of sales (26,774) (19,687)
---------------------------------------------- ------ --------- ---------
Gross profit 21,212 17,397
Distribution costs (1,038) (1,023)
Administrative costs (17,993) (15,713)
Other expenses 4 (6,656) (3,287)
---------------------------------------------- ------ --------- ---------
Operating loss (4,475) (2,626)
Analysed as:
Adjusted EBITDA(1) 3,824 1,336
Items associated with acquisitions and
restructure of the group (1,230) (730)
Other adjusting items (248) -
---------------------------------------------- ------ --------- ---------
EBITDA(1) 2,346 606
Amortisation (3,361) (2,795)
Impairment (2,820) -
Depreciation (640) (437)
---------------------------------------------- ------ --------- ---------
Operating loss (4,475) (2,626)
---------------------------------------------- ------ --------- ---------
Other income 174 -
Finance costs (253) (331)
Loss before tax (4,554) (2,957)
Income tax credit 961 865
---------------------------------------------- ------ --------- ---------
Loss for the year from continuing
operations (3,593) (2,092)
Profit for the year from discontinued
operation - 4,678
---------------------------------------------- ------ --------- ---------
(Loss)/profit for the year (3,593) 2,586
---------------------------------------------- ------ --------- ---------
Attributable to:
Equity holders of the parent (3,639) 2,544
Non- controlling interest 46 42
---------------------------------------------- ------ --------- ---------
Basic (loss)/earnings per share attributable
to equity holders: 6
Continuing operations (pence) (0.98) (0.64)
Discontinued operation (pence) - 1.41
Basic (loss)/earnings per share (pence) (0.98) 0.77
---------------------------------------------- ------ --------- ---------
(1 ) EBITDA is defined as operating profit plus depreciation,
amortisation and impairment of assets. We define Adjusted EBITDA as
EBITDA adjusted for costs associated with acquisitions,
integration, impact of foreign exchange contracts and restructure
of the Group. See note 3 of the financial statements for details.
We present Adjusted EBITDA as additional information because we
understand that it is a measure used by certain investors. However,
other companies may present Adjusted EBITDA differently than we do.
EBITDA and Adjusted EBITDA are not measures of financial
performance under IFRS and should not be considered as an
alternative to operating profit or as a measure of liquidity or an
alternative to net income as indicators of our operating
performance or any other measure of performance derived in
accordance with IFRS.
Consolidated Statement of Comprehensive Income
2010 2009
GBP000s GBP000s
(Loss)/profit for the year (3,593) 2,586
Other comprehensive income
Available-for-sale financial assets
Current year gains - 217
Reclassified to income statement - 398
Actuarial gains on defined benefit pension
plans - 66
Translation of foreign entities 5 -
Income tax relating to components of other
comprehensive income - 154
Other comprehensive income, net of tax 5 835
-------------------------------------------- -------- --------
Total comprehensive (loss)/income for the
year (3,588) 3,421
-------------------------------------------- -------- --------
Attributable to
Equity holders of the parent (3,634) 3,379
Non-controlling interest 46 42
-------------------------------------------- -------- --------
Consolidated Statement of Financial Position
Restated
2010 2009
GBP000s GBP000s
Non-current assets
Property, plant and equipment 1,860 1,199
Intangible assets 36,957 29,623
Deferred tax assets 1,485 1,851
----------------------------------------------------- --------- ---------
40,302 32,673
----------------------------------------------------- --------- ---------
Current assets
Inventories 47 12
Current tax receivable 20 499
Trade and other receivables 16,801 15,938
Cash and cash equivalents 418 863
----------------------------------------------------- --------- ---------
17,286 17,312
----------------------------------------------------- --------- ---------
Total assets 57,588 49,985
----------------------------------------------------- --------- ---------
Current liabilities
Trade and other payables (26,775) (24,308)
Short-term borrowings (15,134) (5,886)
Current tax payable - (50)
Short-term derivative liabilities (100) -
Short-term provisions (1,109) (2,610)
----------------------------------------------------- --------- ---------
(43,118) (32,854)
----------------------------------------------------- --------- ---------
Non-current liabilities
Long-term provisions (1,702) (1,932)
Deferred tax liabilities (732) (939)
Long-term borrowings (9,769) (9,769)
Long-term derivative liabilities (148) -
----------------------------------------------------- --------- ---------
(12,351) (12,640)
----------------------------------------------------- --------- ---------
Total liabilities (55,469) (45,494)
----------------------------------------------------- --------- ---------
Net assets 2,119 4,491
----------------------------------------------------- --------- ---------
Equity
Share capital 207 137
Share premium account 44,257 43,094
Other reserve (37,128) (37,128)
Foreign currency translation reserve 5 -
Retained loss (5,305) (1,666)
----------------------------------------------------- --------- ---------
Equity attributable to equity holders of the parent 2,036 4,437
Non-controlling interest 83 54
----------------------------------------------------- --------- ---------
Total equity 2,119 4,491
----------------------------------------------------- --------- ---------
Consolidated Statement of Changes in Equity
Restated
Foreign Profit
Share currency and Non
Share premium Other translation Revaluation loss controlling Total
capital account reserve reserve reserve account Total interest equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1
January 2009 - - - - (443) (4,258) (4,701) 44 (4,657)
Profit for the
year - - - - - 2,544 2,544 42 2,586
Other
comprehensive
income:
Actuarial gains
on defined
benefit pension
plans - - - - - 66 66 - 66
Current year
gains on sale of
assets - - - - 217 - 217 - 217
Reclassification
to income
statement - - - - 398 - 398 - 398
Deferred tax - - - - (172) (18) (190) - (190)
Total
comprehensive
income for the
year - - - - 443 2,592 3,035 42 3,077
-------- -------- --------- ------------ ------------ -------- -------- ------------ --------
Transactions with
owners:
Dividends - - - - - - - (32) (32)
Reverse
acquisition 137 43,118 (37,128) - - - 6,127 - 6,127
Revaluation of
treasury
shares - (24) - - - - (24) - (24)
Balance at 31
December 2009 137 43,094 (37,128) - - (1,666) 4,437 54 4,491
-------- -------- --------- ------------ ------------ -------- -------- ------------ --------
(Loss)/profit for
the year (3,639) (3,639) 46 (3,593)
Other
comprehensive
income:
Translation of
foreign
entities - - - 5 - - 5 - 5
Total
comprehensive
income for the
year - - - 5 - (3,639) (3,634) 46 (3,588)
-------- -------- --------- ------------ ------------ -------- -------- ------------ --------
Transactions with
owners:
Dividends - - - - - - - (17) (17)
Issue of share
capital
during the
year 70 1,163 - - - - 1,233 - 1,233
Balance at 31
December 2010 207 44,257 (37,128) 5 - (5,305) 2,036 83 2,119
-------- -------- --------- ------------ ------------ -------- -------- ------------ --------
Consolidated Cash Flow Statement
Year to Year to
31 December 31 December
2010 2009
GBP000s GBP000s
Cash flows from operating activities
(Loss)/profit after taxation (3,593) 2,586
Adjustments for:
Depreciation 640 461
Amortisation 3,361 2,953
Impairment 2,820 -
Other income (174) -
Finance expense 253 311
Taxation recognised in profit or loss (961) (860)
Decrease/(increase) in trade and other
receivables 616 (1,268)
(Increase)/decrease in inventories (1) 234
(Decrease)/increase in trade payables (1,526) 292
Revaluation of derivatives 248 -
Gain on disposal - (4,684)
Movement in provision (1,789) (550)
------------------------------------------- ------------- -------------
Cash from operations (106) (525)
Other income 174 -
Interest paid (68) (311)
Income taxes received/(paid) 497 (17)
------------------------------------------- ------------- -------------
Net cash from operating activities 497 (853)
Cash flows from investing activities
Acquisition of Canadean, net of cash
acquired (7,612) -
Acquisition of TMN, net of cash acquired - (2,287)
Sale of discontinued operation - 10,794
Purchase of property, plant and equipment (1,189) (781)
Purchase of intangible assets (1,287) (434)
------------------------------------------- ------------- -------------
Net cash used in/(generated from)
investing activities (10,088) 7,292
Cash flows from financing activities
Repayment of short-term borrowings - (2,500)
Proceeds from long-term borrowings 9,000 -
Repayment of long-term borrowings (500) (10,794)
Net cash generated from/( used) in
financing activities 8,500 (13,294)
------------------------------------------- ------------- -------------
Net decrease in cash and cash equivalents (1,091) (6,855)
Cash and cash equivalents at beginning
of period (5,023) 1,832
Cash and cash equivalents at end of
period (6,114) (5,023)
------------------------------------------- ------------- -------------
Balance sheet reconciliation:
Cash and cash equivalents 418 863
Overdraft (included in short-term
borrowings) (6,532) (5,886)
------------------------------------------- ------------- -------------
Cash and cash equivalents at end of
period (6,114) (5,023)
------------------------------------------- ------------- -------------
Notes to the Consolidated Financial Statements
1. General information
Basis of preparation
These condensed consolidated financial statements have been
prepared in accordance with the Listing Rules of the Financial
Services Authority and in accordance with International Financial
Reporting Standards (IFRS) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations as adopted by the
European Union (EU). In respect of accounting standards applicable
to the Group there is no difference between EU-adopted IFRS and
International Accounting Standards Board (IASB)-adopted IFRS.
The financial statements have been prepared under the historical
cost convention as modified by the revaluation of derivative
financial instruments. These condensed financial statements are for
the year ended 31 December 2010 and should be read in conjunction
with the Annual Report and Accounts for the year ended 31 December
2009 that was sent to all shareholders and is available on the
Company's website. The accounting policies detailed in the
Financial Statements for the year ended 31 December 2009 have been
applied consistently throughout the Group, with changes detailed in
Note 2 below. These financial statements are presented in Pounds
Sterling (GBP), which is also the functional currency of the
Company.
This preliminary announcement does not constitute the Group's
full financial statements for the year ended 31 December 2010. The
auditors have reported on the Group's statutory accounts for the
year ended 31 December 2010 under s495 of the Companies Act 2006,
which does not contain statements under s498(2) or s498(3) of the
Companies Act 2006 and is unqualified. The statutory accounts for
the year ended 31 December 2010 will be filed with the Registrar in
due course.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
relate to property provisions, valuation of acquired intangible
assets, provisions for bad debt, and the carrying value of goodwill
and other intangibles in the statement of financial position.
Property provisions
The onerous lease and dilapidations property provisions require
an estimate to be made of the net present value of the future costs
of vacant and sublet properties. The calculation includes estimates
of future cost involved, including management's estimates of the
long-term letting potential of the properties, future rental
income, market rents, periods of vacancy and the level of
incentives required to sub-let vacant properties.
Valuation of acquired intangibles
Management identified and valued acquired intangibles on
acquisitions that were made during the periods disclosed in the
financial statements. Management has applied judgements in
identifying and valuing intangibles assets separate from goodwill
that consist of assessing the value of brands, software and
customer relationships.
Provision for bad debt
The Group is required to judge when there is sufficient
objective evidence to require the impairment of individual trade
receivables. It does this on the basis of the age of the relevant
receivables, external evidence of the credit status of the debtor
entity and the status of any disputed amounts. The provision for
bad debts and the ageing of overdue debtors are included in note 16
to the financial statements.
Carrying value of goodwill and other intangibles
The carrying value of goodwill and other intangibles is assessed
at least annually to ensure that there is no need for impairment.
Performing this assessment requires management to estimate future
cash flows to be generated by the related cash generating unit,
which entails making judgements including the expected rate of
growth of sales, margins expected to be achieved, the level of
future capital expenditure required to support these outcomes and
the appropriate discount rate to apply when valuing future cash
flows. An impairment of the goodwill allocated to Digital Marketing
would occur if the anticipated increase in sales is reduced to a
decline in sales of 3.3% or by increasing the discount rate to
15.85%.
At 31 December 2010 the Group had GBP37.0 million of goodwill
and other intangibles assets (2009: GBP29.6 million).
Going concern
The Group meets its day-to-day working capital requirements from
an overdraft facility of GBP7.0 million of which GBP6.5 million was
utilised as at 31 December 2010. Based on cash flow projections the
Group considers the existing financing facilities to be adequate to
meet short-term commitments. There are no covenants associated with
the overdraft and no restrictions on the long-term borrowing.
The Group has two loans from the Chairman and majority
shareholder, Mr Danson. An interest free loan of GBP9.8 million is
repayable by 2019. The company has received a written undertaking
that Mr Danson would not demand repayment of this loan for a period
of 12 months from the date of approval of the financial
statements.
The GBP9 million loan to fund the acquisition of Canadean has
GBP8.5 million outstanding as at 31 December 2010. Repayments on
the loan will only be made to the extent that the Group has
sufficient forecast working capital to meet all of its
liabilities.
In addition to the existing facility Mr Danson provided the
Group with a GBP2.0 million working capital facility at the time of
the reverse acquisition. This facility has not yet been drawn upon
and is not forecast to be drawn upon.
The Group's financing facility is an on demand basis. The Group
has prepared the accounts on a going concern basis on the
assumption that this facility is available. In the event of the
overdraft facility not being available, the Group is confident that
it can obtain suitable short-term financing.
Restatement of comparatives
Certain comparatives have been restated due to errors in the
treatment of the fair value of the cost of the business combination
with TMN Group plc (TMN) and the premium arising on the reverse
acquisition of the Company on 25 June 2009.
The cost of the combination had been disclosed as being
calculated based on the fair value of TMN before the combination,
using the TMN share price before suspension from AIM in February
2009. However, IFRS 3 requires the fair value of the cost of the
combination to be calculated based on the fair value of the legal
subsidiary on the date of the exchange. The revised cost of the
combination is GBP6,127,000 giving rise to an increase in the value
of goodwill attributed to the TMN acquisition of GBP2,344,000 and
an associated adjustment to other reserves.
Share premium had been calculated using the number of shares of
TMN before the consideration issue and the pre-suspension share
price. The calculation should have used the number of shares issued
valued at the share price on the date of exchange. Management have
recalculated the share premium based on the share price on the date
of the exchange which leads to an increase in the share premium of
GBP31,275,000 with a corresponding decrease in the value of the
other reserve that arises upon the reserve acquisition.
The impact of this restatement is shown below:
Reported Adjustments Restated
2009 2009
Non-current assets GBP'000 GBP'000 GBP'000
Intangible assets 27,279 2,344 29,623
Equity
Share premium account 11,819 31,275 43,094
Other reserve (8,197) (28,931) (37,128)
----------------------- --------- ------------ ---------
The opening balance sheet for the comparative period remains
unaffected by this restatement.
Based on the value in use as at 31 December 2009, the
recoverable amount exceeds the restated carrying amount of goodwill
for TMN by GBP14.5 million. Management has performed sensitivity
analysis on the value in use calculation. An impairment of the
goodwill would occur if the anticipated increase in sales is
reduced to a decline in sales of 20.6% or by increasing the
discount rate to 18.4%. 2. Accounting policies
a) Change to accounting policies
The Group has adopted the following revisions and amendments to
IFRS issued by the International Accounting Standards Board, which
are relevant to and effective for the Group's financial statements
for the annual period beginning 1 January 2010:
-- IFRS 3 Business Combinations (Revised 2008)
-- IAS 27 Consolidated and Separate Financial Statements
(Revised 2008)
-- Improvements to IFRSs 2009
Adoption of IFRS 3 Business Combinations (Revised 2008)
IFRS 3R has been applied prospectively to business combinations
for which the acquisition date is on or after 1 January 2010. For
the year ended 31 December 2010, the adoption of IFRS 3R has
affected the accounting for the Group's acquisition of Canadean
Limited by increasing the administrative expenses related to
acquisition-related costs by GBP161,000. Basic and diluted earnings
per share for the current period have decreased by 0.04 pence.
Business combinations for which the acquisition date is before 1
January 2010 have not been restated.
3. Segmental analysis
Segment contribution is reported to the Board (which is
considered to be the Group's chief operating decision maker) on a
monthly basis and consists of earnings before interest, tax,
depreciation, amortisation, central overheads and other adjusting
items.
The Group considers the business from a divisional (Business
Information and Digital Marketing) and a geographic perspective.
Canadean, which was acquired during the year, was integrated into
Business Information after the acquisition.
Changes in segments during the year
During 2010 the research business of TMN Group was restructured
and combined with the Progressive business unit to form the segment
Business Information. The remaining business of TMN Group now forms
a new division called Digital Marketing. Segmental results for 2009
have been restated accordingly.
Business Information
Business Information delivers integrated digital marketing
solutions to its clients through print, web and events.
Digital Marketing
Digital Marketing provides online marketing and lead
generation.
Year to 31 December 2010
Business Digital
Information Marketing Total
GBP000s GBP000s GBP000s
Revenue from external
customers 39,523 8,463 47,986
Segment contribution 13,097 2,342 15,439
----------------------- ------------- ----------- --------
Year to 31 December 2009 - Restated
Business Digital
Information Marketing Total
GBP000s GBP000s GBP000s
Revenue from external
customers 33,435 3,649 37,084
Segment contribution 8,266 1,031 9,297
----------------------- ------------- ----------- --------
Reconciliation of segment operating loss to loss before tax
Year to Year to
31 December 31 December
2010 2009
GBP000s GBP000s
Segment contribution 15,439 9,297
Unallocated central overheads (11,615) (7,961)
Other expenses (6,656) (3,287)
Depreciation (640) (437)
Amortisation (1,003) (238)
Other income 174 -
Finance costs (253) (331)
Loss before tax (4,554) (2,957)
------------------------------- ------------- -------------
Unallocated central overheads consists of corporate, HR,
finance, IT and facilities expenses. They have increased from
GBP8.0 million in 2009 to GBP11.6 million in 2010 due to the full
year inclusion of TMN Group and four months of Canadean central
overheads.
Geographical analysis
Year to 31 December 2010 UK Europe Rest of World Total
GBP000s GBP000s GBP000s GBP000s
Revenue from external customers 23,830 15,579 8,577 47,986
-------------------------------- -------- -------- -------------- --------
Year to 31 December 2009 UK Europe Rest of World Total
GBP000s GBP000s GBP000s GBP000s
Revenue from external customers 18,136 11,973 6,975 37,084
-------------------------------- -------- -------- -------------- --------
4. Other expenses
2010 2009
GBP000s GBP000s
Redundancy 1,063 634
Property related provisions (57) 76
Deal costs 224 20
Revaluation of currency collar 248 -
Impairment 2,820 -
Amortisation of acquired intangibles 2,358 2,557
6,656 3,287
-------------------------------------- -------- --------
-- Redundancy costs relate to redundancies made during the year
that were announced prior to 31 December 2010. Redundancies have
occurred as central functions are combined from the acquisitions
that the group has made.
-- Property related provisions relate to the movement in the
provision made for onerous properties and dilapidations.
-- Deal costs are mainly acquisition related costs such as stamp
duty, legal and professional fees. Legal and professional fees
relating to the acquisition of Canadean amounted to GBP161,000.
-- The impairment and amortisation relate to acquired intangible
assets.
5. Other income
2010 2009
GBP000s GBP000s
VAT refund 174 -
------------ -------- --------
174 -
------------ -------- --------
A VAT refund, relating to VAT that was expensed on rights issues
in prior periods, was received during the year.
6. Earnings per share
The calculation of the basic earnings per share is normally
based on the earnings attributable to ordinary shareholders divided
by the weighted average number of shares in issue during the
period. As a result of the reverse acquisition in the prior period
the weighted average number of shares up until the reverse
acquisition was deemed to be the number of shares that were issued
by the Company for the reverse acquisition.
The Group doesn't have any diluted shares; therefore the
calculation of the basic earnings per diluted shares is the same
that the calculation of the basic earnings per share.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
Year to 31 Year to 31
December 2010 December 2009
Continuing operations
Loss for the period attributable to
ordinary shareholders (GBP'000s) (3,639) (2,134)
Weighted average number of shares (000's) 371,850 332,127
Basic loss per share (pence) (0.98) (0.64)
Discontinued operations
Profit for the period attributable to
ordinary shareholders (GBP'000s) - 4,678
Weighted average number of shares (000's) - 332,127
Basic earnings per share (pence) - 1.41
Total operations
(Loss)/profit for the period attributable
to ordinary shareholders (GBP'000s) (3,639) 2,544
Weighted average number of shares (000's) 371,850 332,127
Basic (loss)/earnings per share (pence) (0.98) 0.77
--------------- ---------------
7. Borrowings
2010 2009
GBP000s GBP000s
Current
Bank overdraft 6,532 5,886
Loans due within one year 8,602 -
--------------------------- -------- --------
15,134 5,886
Non-current
Long-term loans 9,769 9,769
--------------------------- -------- --------
The Group currently has a GBP7m overdraft facility. The bank
overdraft is subject to a Group set-off arrangement. Interest is
charged on the overdraft at 2.75% over the bank's base rate. Loans
consist of two loans provided by Michael Danson.
Interest free loan repayable by 2019
A GBP9.8 million loan provided by Michael Danson. The loan note
allows Michael Danson to require redemption at par on demand or for
the company to redeem at par at any time. As such the loan is
considered to be an on demand liability. As at 31 December 2010 the
loan is classified as repayable after more than one year having
received an undertaking from Michael Danson that he would not
demand repayment for a period of 12 months from the balance sheet
date. This undertaking was reconfirmed upon signing the financial
statements to ensure that the directors could prepare the accounts
on a going concern basis, whilst not deemed to have constituted a
material modification of the terms of the loan. The loan is
repayable by 2019.
GBP9 million loan to fund acquisition of Canadean
A GBP9 million loan was provided by Michael Danson to fund the
acquisition of Canadean. The loan is repayable by 2013 and has an
interest rate of 275 basis points over the 3-month London Interbank
Offered Rate, in line with the rates that were available from
third-party lenders at the time of the acquisition
negotiations.
The loan is repayable in instalments of GBP1,500,000, payable
every three months, commencing from 30 September 2010. Instalments
are payable subject to there being sufficient working capital to
fund the Group in the foreseeable future. As such, only one
instalment of GBP500,000 was paid in the year ended 31 December
2010. Where instalments are not paid they are payable on
demand.
8. Acquisitions
Canadean
On 1 September 2010, Progressive acquired 100% of the issued
share capital of Canadean, a company based in the UK for a total
consideration of GBP9 million in cash and the issue of 6,944,445
shares. Canadean has established an enviable position in the market
place, providing high quality business critical information for
many of the world's largest beverage companies, both soft drinks
and beer, as well as key suppliers to the industry across
packaging, raw materials and ingredients. The acquisition provides
Progressive with a strong brand in the business information market
with mature customer relationships. The amounts recognised for each
class of assets, liabilities and contingent liabilities recognised
at the acquisition date were as follows:
Carrying Fair value
value adjustments Fair value
GBP000s GBP000s GBP000s
Property, plant and equipment 112 - 112
Intangible assets 117 4,535 4,652
Trade and other receivables 1,479 - 1,479
Inventories 34 - 34
Cash and cash equivalents 1,388 - 1,388
--------- ------------- -----------
Total assets 3,130 4,535 7,665
Deferred tax (2) (1,270) (1,272)
Trade and other payables (3,675) - (3,675)
Long-term provisions (58) - (58)
--------- ------------- -----------
Total liabilities (3,735) (1,270) (5,005)
Net (liabilities)/assets (605) 3,265 2,660
--------- ------------- -----------
Cash 9,000
Equity issued 1,233
-----------
10,233
Less net assets acquired (2,660)
Goodwill 7,573
-----------
The goodwill that arose on the combination can be attributed to
revenue and cost synergies expected to arise upon integration of
Canadean into Progressive. The trade and other receivables had a
contractual value of GBP1,539,000 and a fair value of GBP1,479,000
based on the best estimate of cash flows that will be collected.
The goodwill and fair value adjustments are not expected to be tax
deductible.
Canadean contributed a profit of GBP320,000 from the date of
acquisition to 31 December 2010. Had the acquisition occurred on 1
January 2010 the revenue of the Group for the year to 31 December
2010 would have been GBP52,449,000 and the loss for the year would
have been GBP4,027,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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