TIDMPRO
RNS Number : 7554Y
Progressive Digital Media Group PLC
06 March 2012
6 March 2012
Progressive Digital Media Group Plc
Preliminary Results For The Year Ended 31 December 2011
'A year of significant progress'
The principal activity of Progressive Digital Media Group Plc
(PDMG) and its subsidiaries ('the Group') is to provide its
customers with high quality information and services through
multiple channels. The unique and up to date knowledge and
information we provide enables organisations to gain competitive
advantage and market share.
Highlights
Key achievements in 2011
-- Delivery of revenue and earnings growth
-- Renewed our focus on the Consumer and Technology Business Information markets
-- Plans in place for International expansion in 2012
-- Infrastructure in place for future growth
Financial performance
-- Group revenue increased by 13.3% to GBP54.4m (2010: GBP48.0m)
-- Adjusted EBITDA(2) increased by 91.2% to GBP7.3m (2010: GBP3.8m)
-- Adjusted EBITDA Margin (2) increased to 13.5% (2010: 8.0%)
-- Reported EBITDA(1) increased by 143.5% to GBP5.7m (2010: GBP2.3m)
-- Reported loss before tax of GBP7.9m (2010: Loss GBP4.6m)
inclusive of a non-cash impairment charge of GBP9.4m.
Our business
-- A strong and scalable asset base
-- Premium business information services covering the Consumer and Technology markets
-- Significant contracted and visible revenue streams including digital subscriptions
-- Globally exploitable business model
-- High gross margin product
Mark Meek, CEO of Progressive Digital Media Group plc,
commented:
"These are a strong set of results delivered during a period of
substantial change and investment. Moreover, this has been achieved
in a period of relatively weak economic conditions.
We are beginning to benefit from the significant investments in
business information content, staff and delivery platforms and to
reap rewards from the efficiencies we have achieved through the
introduction and integration of common processes and systems."
Note 1: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment. Includes a charge of GBP1.2 million
for share based payment (2010: nil).
Note 2: Adjusted EBITDA: Earnings before interest, tax,
depreciation and amortisation, impairment, share based payments,
adjusted for costs associated with derivatives, acquisitions,
integration and restructure of the Group. Adjusted EBITDA Margin is
defined as; Adjusted EBITDA as a percentage of revenue.
Enquiries:
Progressive Digital Media Group plc 0207 936 6400
Mike Danson, Chairman
Mark Meek, CEO
Singer Capital Markets Limited 0203 205 7500
James Maxwell
Nick Donovan
Hudson Sandler 0207 796 4133
Nick Lyon
CHAIRMAN'S STATEMENT
Over the last three years we have implemented major change
programmes as we brought together the various companies in the
Group and refocused them on our key markets. We have also continued
to invest in Business Intelligence content, staff and delivery
platforms.
As part of this continuing strategy, we propose to rebrand the
company under the unified name of Progressive Intelligence PLC. We
feel this better reflects our objective to become a global leader
in providing business information to our customer base across
multiple channels.
We acquired Canadean, a leading provider of business and market
intelligence to the global consumer products market, in September
2010. The business is now fully integrated within the Group and in
line with our expectations, continued to perform well in 2011.
With the organisational changes that we have implemented and the
significant investment made in content and staff, we believe the
Group now has in place the correct structure and technical
platforms to allow us to accelerate our growth in 2012 and
beyond.
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. Premium business information services covering the Consumer and Technology markets
3. Significant contracted and visible revenue streams including digital subscriptions
4. Global exploitable business model
5. High gross margin product
Our strategy
Our strategy is to focus on:
1. Key, high growth global markets
2. Digital subscription based content, which can be leveraged across multiple platforms
3. Quality product and customer delivery
The strategy will be delivered by a combination of strong
organic growth and selective acquisitions in our target
markets.
Board changes
Mark Meek was appointed as CEO in August 2011. Mark joined the
Group from Datamonitor plc and has over 20 years of senior
management experience in the Business Information sector.
Simon Pyper remains on the Board as Chief Financial Officer.
Current trading and outlook
Current trading is in line with expectations and we expect to
make further progress during the remainder of 2012. 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 content and our delivery platforms.
We are committed to the long-term development of this company
and are 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
6 March 2012
CHIEF EXECUTIVE OFFICER'S REVIEW
These are a strong set of results delivered during a period of
substantial change and investment. Moreover, that this has been
achieved in a period of relatively weak economic conditions is even
more pleasing.
Our intention is to become a leading provider of premium
business information focused on the global Consumer and Technology
sectors. Moreover, we believe that by increasing our focus on
premium business information and fact-based insight will make the
organisation even more resilient and will deliver robust and
consistent revenue and profit growth.
By proposing to rename the company Progressive Intelligence PLC
we aim to be an instantly recognisable brand that becomes
indispensible to companies in an environment where information is
increasingly linked to competitive advantage. We provide this
information via multiple channels: premium business information,
face-to-face interactions, premium web-based content and where
appropriate, printed materials.
We are beginning to benefit from the significant investments in
Business Information content, staff and delivery platforms and to
reap rewards from the efficiencies we have achieved through the
introduction and integration of common processes and systems.
The Group is now focused on the business information market and
we believe that this strategy will be a major accelerator of growth
in 2012 and in future years.
Key achievements delivered in 2011:
-- Increased the Group's revenue by 13.3% year on year
-- Increased Adjusted EBITDA margins by 5.5% to 13.5%
-- Increased profitability at the Adjusted EBITDA level by 91.2%
-- Renewed our focus on the Consumer and Technology Business Information markets
-- Plans in place for International expansion in 2012
-- Infrastructure in place for future growth.
During 2012 our key objectives will be to:
-- Focus on high-quality, subscription based Business Information services and products
-- Maximise sales force effectiveness, following significant investment in our sales teams
-- Expand our geographic footprint in high-growth consumer
markets, such as China, India, Japan, the Americas, Australasia,
South Africa and the Middle East
-- Focus on long term margin improvement.
The largest opportunity for the Group is in Business
Information, which is global in nature, less prone to both short
term macro variations and longer term structural change and
continues to grow. Moreover, with Canadean we have a strong and
credible base from which to grow our offering.
We are confident that we are well placed to meet our key
objectives and deliver long term profitable growth. We believe that
we now have a scalable business model with a strong product
proposition which is supported by committed and talented staff.
M Meek
Chief Executive Officer
6 March 2012
CHIEF FINANCIAL OFFICER'S FINANCIAL REVIEW
Financially, the Group has performed well and is profitable at
the EBITDA (1) and Adjusted EBITDA (2) level. We have increased
revenues to GBP54.4 million (2010: GBP48.0 million) and improved
Adjusted EBITDA margins by 5.5% to 13.5%. Loss before tax was
GBP7.9 million (2010: loss before tax GBP4.6 million), which
includes:
-- GBP9.4 million non-cash impairment charge relating to the
goodwill of B2C digital marketing;
-- GBP1.2 million of share option expense;
-- GBP0.2 million of M&A costs; and
-- GBP0.4 million of redundancy costs.
2011 2010
Continuing operations GBP000s GBP000s
Revenue 54,353 47,986 13.3%
Loss before tax (7,948) (4,554)
Depreciation 721 640
Amortisation 3,013 3,361
Impairment 9,360 2,820
Other income - (174)
Finance costs 566 253
-------------------------------- -------- -------- -------
EBITDA(1) 5,712 2,346 143.5%
Redundancy 432 1,063
Property related provisions (1) (57)
Revaluation of currency collar (195) 248
Share option expense 1,157 -
M&A costs 208 -
Deal costs - 224
-------------------------------- -------- -------- -------
Adjusted EBITDA(2) 7,313 3,824 91.2%
-------------------------------- -------- -------- -------
Adjusted EBITDA % 13.5% 8.0%
-------------------------------- -------- -------- -------
Note 1; EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment.
Note 2; Adjusted EBITDA: EBITDA adjusted for costs associated
with derivatives, acquisitions, integration, share-based payment
and restructure of the Group.
Despite the reported operating loss for the period, the
underlying business is profitable with good opportunities for
long-term profitable growth in terms of PBT and EBITDA as well as
further growth in sales and improvement in margins.
Divisional performance:
Business Information is predominately focused on the B2B space,
providing content-rich, web-based information products, via its
print, web and events divisions. Business Information's results
include for the first time a full year's contribution from
Canadean, which was acquired in September 2010.
Revenues for the year are GBP48.2 million (2010: GBP39.5
million) generating a contribution of GBP17 million (2010: GBP13.1
million).
B2C digital marketing is focused on the B2C market, providing
innovative, online digital marketing, research and panel
solutions.
Performance for the year has been disappointing, with revenues
of GBP6.2 million (2010: GBP8.5 million) and contribution of GBP1.4
million (2010: GBP2.3 million).
Impairment of goodwill
During the year, the Group has recognised a non-cash impairment
charge in relation to the goodwill allocated to the B2C digital
marketing business unit of GBP9.4 million. The goodwill was
recognised on the Group's reverse acquisition of the TMN Group in
2009. Since acquisition, the TMN Group's performance has been below
expectations.
The B2C digital marketing business unit has seen a significant
fall in revenues over the past 12 months (a decline of 27% in that
period). It is no longer seen as a future growth opportunity for
the Group. We will continue to support the business unit; however,
it is clear that significant investment is needed to stabilise the
business, which we are not going to provide. At June 2011, it was
felt that the business could be stabilised and turned around. In
the second half of the year however, there was a material worsening
in the results.
The appointment of Mark Meek as CEO has placed renewed focus on
driving the Business Information business unit to become a global
leader. Therefore, future investment will be focused in this area
rather than in the B2C digital marketing business unit. Management
has concluded that the carrying value of goodwill exceeded the
future cash flow projections and as a result has decided that the
goodwill allocated to B2C digital marketing is impaired.
Earnings per share
Basic loss per share from continuing operations was 2.09 pence
per share (2010: loss of 0.98 pence per share).
Cash flow
The Group generated GBP5.7 million of EBITDA in 2011, which
excludes GBP0.8 million paid in relation to onerous leases and
other amounts paid in relation to costs that were provided for at
the start of the year. Working capital movements reduced the cash
generated from operations to an inflow of GBP3.1 million. A number
of leases were assigned or terminated during 2010 and the cash
impact is expected to reduce in future periods. No leases were
assigned or terminated in the current year.
Capital expenditure was GBP1.1 million in 2011 (GBP2.5 million
in 2010). This included GBP0.5 million on software.
Currency rate risk
The Group's primary objective in managing foreign currency risk
is to protect against the risk that the eventual Sterling net cash
flows will be affected by changes in foreign currency exchange
rates. To do this, the Group enters into foreign exchange collars
that limit both the risk and benefit from movements in US dollar
and Euro exchange rates with Sterling. Whilst commercially this
hedges the Group's currency exposures, it does not meet the
requirements for hedge accounting and accordingly any movement in
the fair value of the foreign exchange collars are recognised in
the income statement.
Liquidity risk and going concern
The Group's approach to managing liquidity risk is to ensure, as
far as possible, that it has sufficient liquidity to meet its
liabilities as they fall due with surplus facilities to cope with
any unexpected variances in timing of cash flows.
In October 2011, the Group refinanced its debt position. A GBP6
million term loan and a GBP6 million revolving capital facility
were issued by the Royal Bank of Scotland. The new facilities
replaced the GBP7 million overdraft facility and also repaid Mike
Danson GBP6.5 million of the loan used to fund the acquisition of
Canadean. The term loan is repayable over four years in equal
instalments on the anniversary of the issue. The finance facilities
were issued with debt covenants which are measured on a quarterly
basis. The Company has operated within its covenants as assessed at
31 December 2011. Management have reviewed forecasted cash flows
and there is no indication that there will be any breach in the
next 12 months.
The Group meets its day-to-day working capital requirements from
an overdraft facility of GBP3 million, of which GBP1.29 million was
utilised as at 31 December 2011. Based on cash flow projections,
the Group considers the existing financing facilities to be
adequate to meet short-term commitments.
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 GBP9.0 million loan to fund the acquisition of Canadean has
GBP2 million outstanding as at 31 December 2011. 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.
The Directors have a reasonable expectation that there are no
material uncertainties that cast significant doubt about the
Group's ability to continue as a going concern. Accordingly, the
Group has prepared the annual report and financial statements on a
going concern basis.
S Pyper
Chief Financial Officer
6 March 2012
Consolidated Income Statement
Notes 2011 2010
GBP000s GBP000s
Continuing operations
Revenue 3 54,353 47,986
Cost of sales (31,617) (26,774)
--------------------------------------- ------ --------- ---------
Gross profit 22,736 21,212
Distribution costs (971) (1,038)
Administrative costs (16,408) (17,993)
Other expenses 4 (12,739) (6,656)
--------------------------------------- ------ --------- ---------
Operating loss (7,382) (4,475)
Analysed as:
Adjusted EBITDA(2) 7,313 3,824
Items associated with acquisitions
and restructure of the group (1,796) (1,230)
Other adjusting items 195 (248)
--------------------------------------- ------ --------- ---------
EBITDA(1) 5,712 2,346
Amortisation (3,013) (3,361)
Impairment (9,360) (2,820)
Depreciation (721) (640)
--------------------------------------- ------ --------- ---------
Operating loss (7,382) (4,475)
--------------------------------------- ------ --------- ---------
Other income - 174
Finance costs (566) (253)
Loss before tax (7,948) (4,554)
Income tax credit 128 961
--------------------------------------- ------ --------- ---------
Loss for the year (7,820) (3,593)
--------------------------------------- ------ --------- ---------
Attributable to:
Equity holders of the parent (7,862) (3,639)
Non- controlling interest 42 46
--------------------------------------- ------ --------- ---------
Basic loss per share attributable
to equity holders: 5
Basic loss per share (pence) (2.09) (0.98)
Diluted loss per share (pence) (2.09) (0.98)
--------------------------------------- ------ --------- ---------
(1) EBITDA is defined as earnings before interest, tax,
depreciation, amortisation and impairment.
(2) We define Adjusted EBITDA as EBITDA adjusted for costs
associated with acquisitions, integration, impact of foreign
exchange contracts, shared based payments and restructure of the
Group. We present Adjusted EBITDA as additional information because
we understand that it is a measure used by certain investors and
because it is used as the measure of segment profit or loss.
However, other companies may present Adjusted EBITDA differently.
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
2011 2010
GBP000s GBP000s
Loss for the year (7,820) (3,593)
Other comprehensive income
Translation of foreign entities 2 5
Other comprehensive income, net of tax 2 5
---------------------------------------- -------- --------
Total comprehensive loss for the year (7,818) (3,588)
---------------------------------------- -------- --------
Attributable to
Equity holders of the parent (7,860) (3,634)
Non-controlling interest 42 46
---------------------------------------- -------- --------
Consolidated Statement of Financial Position
2011 2010
GBP000s GBP000s
Non-current assets
Property, plant and equipment 1,712 1,860
Intangible assets 25,106 36,957
Deferred tax assets 1,500 1,485
----------------------------------------------------- --------- ---------
28,318 40,302
----------------------------------------------------- --------- ---------
Current assets
Inventories 79 47
Current tax receivable - 20
Trade and other receivables 17,538 16,801
Cash and cash equivalents 2,252 418
----------------------------------------------------- --------- ---------
19,869 17,286
----------------------------------------------------- --------- ---------
Total assets 48,187 57,588
----------------------------------------------------- --------- ---------
Current liabilities
Trade and other payables (25,221) (26,775)
Short-term borrowings (4,807) (15,134)
Current tax payable (389) -
Short-term derivative liabilities (54) (100)
Short-term provisions (767) (1,109)
----------------------------------------------------- --------- ---------
(31,238) (43,118)
----------------------------------------------------- --------- ---------
Non-current liabilities
Long-term provisions (1,211) (1,702)
Deferred tax liabilities (372) (732)
Long-term borrowings (19,936) (9,769)
Long-term derivative liabilities - (148)
----------------------------------------------------- --------- ---------
(21,519) (12,351)
----------------------------------------------------- --------- ---------
Total liabilities (52,757) (55,469)
----------------------------------------------------- --------- ---------
Net (liabilities)/assets (4,570) 2,119
----------------------------------------------------- --------- ---------
Equity
Share capital 207 207
Share premium account 44,257 44,257
Other reserve (37,128) (37,128)
Foreign currency translation reserve 7 5
Retained loss (12,010) (5,305)
----------------------------------------------------- --------- ---------
Equity attributable to equity holders of the parent (4,667) 2,036
Non-controlling interest 97 83
----------------------------------------------------- --------- ---------
Total equity (4,570) 2,119
----------------------------------------------------- --------- ---------
Consolidated Statement of Changes in Equity
Equity
attributable
Foreign to equity
Share currency holders Non
Share premium Other translation Retained of the controlling Total
capital account reserve reserve loss parent interest equity
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1
January
2010 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
(Loss)/profit
for the
period - - - - (7,862) (7,862) 42 (7,820)
Other
comprehensive
income:
Translation of
foreign
entities - - - 2 - 2 - 2
--------------- -------- -------- --------- ------------ --------- ------------- ------------ -------------------
Total
comprehensive
income for
the year - - - 2 (7,862) (7,860) 42 (7,818)
--------------- -------- -------- --------- ------------ --------- ------------- ------------ -------------------
Transactions
with owners:
Dividends - - - - - - (28) (28)
Share
payment
payments - - - - 1,157 1,157 - 1,157
Balance at 31
December
2011 207 44,257 (37,128) 7 (12,010) (4,667) 97 (4,570)
--------------- -------- -------- --------- ------------ --------- ------------- ------------ -------------------
Consolidated Cash Flow Statement
Year to Year to
31 December 31 December
2011 2010
GBP000s GBP000s
Cash flows from operating activities
Loss after taxation (7,820) (3,593)
Adjustments for:
Depreciation 721 640
Amortisation 3,013 3,361
Impairment 9,360 2,820
Other income - (174)
Finance expense 566 253
Share option charge 1,157 -
Taxation recognised in profit or loss (128) (961)
(Increase)/decrease in trade and other
receivables (1,073) 616
Increase in inventories (32) (1)
Decrease in trade payables (1,676) (1,526)
Revaluation of derivatives (195) 248
Movement in provision (833) (1,789)
------------------------------------------- ------------- -------------
Cash generated/(used) from operations 3,060 (106)
Other income - 174
Interest paid (230) (68)
Income taxes received 164 497
------------------------------------------- ------------- -------------
Net cash from operating activities 2,994 497
Cash flows from investing activities
Acquisition of Canadean, net of cash
acquired - (7,612)
Purchase of property, plant and equipment (563) (1,189)
Purchase of intangible assets (522) (1,287)
------------------------------------------- ------------- -------------
Net cash from investing activities (1,085) (10,088)
Cash flows from financing activities
Proceeds from long-term borrowings 11,667 9,000
Repayment of long-term borrowings (6,500) (500)
Net cash used in financing activities 5,167 8,500
------------------------------------------- ------------- -------------
Net increase/(decrease) in cash and
cash equivalents 7,076 (1,091)
Cash and cash equivalents at beginning
of period (6,114) (5,023)
Cash and cash equivalents at end of
period 962 (6,114)
------------------------------------------- ------------- -------------
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 2011 and should be read in conjunction
with the Annual Report and Accounts for the year ended 31 December
2010 that was sent to all shareholders and is available on the
Company's website. 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 2011. The
auditors have reported on the Group's statutory accounts for the
year ended 31 December 2011 under s495 of the Companies Act 2006,
which do not contain statements under s498(2) or s498(3) of the
Companies Act 2006 and are unqualified. The statutory accounts for
the year ended 31 December 2011 will be filed with the Registrar of
companies 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, share based payments 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.
Share based payments
The Group operates a share based compensation plan under which
the entity receives services from employees as consideration for
equity instruments (options) of the Group. The fair value of the
employee services received in exchange for the grant of the options
and awards is recognised as an expense. The total amount to be
expensed is determined by reference to the fair value of the
options granted, excluding the impact of any non-market service and
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period). Non-market vesting conditions are included
in assumptions about the number of options and awards that are
expected to vest. The total amount expensed is recognised over the
vesting period, which is the period over which all of the specified
existing conditions are to be satisfied. At each reporting date,
the entity revises its estimates of the number of options and
awards that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the Income Statement, with a corresponding
adjustment to the share option reserve within equity.
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 revenues, 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. Management consider that the most sensitive of these
assumptions is the future maintainable earnings of the cash
generated units. An impairment charge has been recognised in
respect of the B2C digital marketing segment for the year ended 31
December 2011.
At 31 December 2011 the Group had GBP25.1 million of goodwill
and other intangibles assets (2010: GBP36.9 million).
Going concern
The Group meets its day-to-day working capital requirements from
an overdraft facility of GBP3.0 million of which GBP1.29 million
was utilised as at 31 December 2011. Based on cash flow projections
the Group considers the existing financing facilities to be
adequate to meet short-term commitments.
The Group has two loans from the Chairman and majority
shareholder, Mr Danson. The interest free loan of GBP9.8 million is
repayable by 2019 and is not expected to be repaid in the next 12
months. The GBP9 million loan to fund the acquisition of Canadean
has GBP2.0 million outstanding as at 31 December 2011. 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.
Given the size and nature of these loans, the Group is reliant on
the financial support of the Chairman and majority shareholder.
The Directors have a reasonable expectation that there are no
material uncertainties that cast significant doubt about the
Group's ability to continue as a going concern. Accordingly, the
Group has prepared the annual report and financial statements on a
going concern basis.
2. Accounting policies
This report has been prepared based on the accounting policies
detailed in the Group's financial statements for the year ended 31
December 2011.
3. Segmental analysis
Segmental results
The Group considers the business from a division (Business
Information and B2C digital marketing) and a geographic
perspective.
Segment profit or loss 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.
Business Information
Business Information is predominately focused on the B2B space,
providing content-rich, web-based information products, via its
print, web and events divisions.
B2C digital marketing
B2C digital marketing is focused on the B2C market, providing
innovative, online digital marketing, research and panel
solutions.
Year to 31 December 2011
Business B2C digital
Information marketing Total
GBP000s GBP000s GBP000s
Revenue from external
customers 48,201 6,152 54,353
Segment result 16,956 1,358 18,314
----------------------- ------------- ------------ --------
Year to 31 December 2010
Business B2C digital
Information marketing Total
GBP000s GBP000s GBP000s
Revenue from external
customers 39,523 8,463 47,986
Segment result 13,097 2,342 15,439
----------------------- ------------- ------------ --------
Reconciliation of segment results to loss before tax
Year to Year to
31 December 31 December
2011 2010
GBP000s GBP000s
Segment result 18,314 15,439
Unallocated central overheads (11,001) (11,615)
Other expenses (12,739) (6,656)
Depreciation (721) (640)
Amortisation (1,235) (1,003)
Other income - 174
Finance costs (566) (253)
Loss before tax (7,948) (4,554)
------------------------------- ------------- -------------
Geographical analysis
Year to 31 December 2011 UK Europe Rest of World Total
GBP000s GBP000s GBP000s GBP000s
Revenue from external customers 17,240 21,879 15,234 54,353
--------------------------------- -------- -------- -------------- --------
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
--------------------------------- -------- -------- -------------- --------
4. Other expenses
2011 2010
GBP000s GBP000s
Redundancy 432 1,063
Property related provisions (1) (57)
Deal costs - 224
Revaluation of currency collar (195) 248
Impairment 9,360 2,820
Share option expense 1,157 -
M&A costs 208 -
Amortisation of acquired intangibles 1,778 2,358
12,739 6,656
-------------------------------------- -------- --------
-- Redundancy costs relate to redundancies made during the year
that were announced prior to 31 December 2011.
-- Property related provisions relate to the consolidated Income
Statement impact in the provision made for onerous properties and
dilapidations.
-- The revaluation of currency collar relates to movement in the
fair value of the short and long term derivatives.
-- The impairment and amortisation relate to acquired intangible assets.
-- The share option expense relates to the share option plan.
5. Earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
The Group has a share options scheme in place, the effect of
which is anti-dilutive on the earnings per share calculation.
Therefore, in accordance with IAS 33 no adjustment has been made to
the diluted loss per share. The diluted loss per share is equal to
basic loss 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
December 31 December
2011 2010
Basic
Loss for the period attributable to ordinary
shareholders of the parent company (GBP'000s) (7,862) (3,639)
Weighted average number of shares (000s) 376,492 371,850
Basic loss per share (pence) (2.09) (0.98)
Diluted
Loss for the period attributable to ordinary
shareholders of the parent company (GBP'000s) (7,862) (3,639)
Weighted average number of shares (000s) 376,492 371,850
Diluted loss per share (pence) (2.09) (0.98)
------------------------------------------------ ----------- -------------
6. Borrowings
2011 2010
GBP000s GBP000s
Current
Bank overdraft 1,290 6,532
Long-term loans due within one year 3,517 8,602
------------------------------------- -------- --------
4,807 15,134
Non-current
Long-term loans 19,936 9,769
------------------------------------- -------- --------
The Royal Bank of Scotland Credit Facilities
The Group agreed new credit facilities with The Royal Bank of Scotland
in October 2011, replacing its previous facilities with Lloyds Bank
Plc. The details of the revised facilities are as follows:
* Term Loan Facility of GBP6m, repayable at GBP1.5m per
annum until 2015 with an interest rate of BBA LIBOR
plus a margin of 275 basis points. This was utilised
to refinance existing senior debt provided by Michael
Danson.
* Revolving credit facility of GBP6m with an interest
rate of BBA LIBOR plus a margin of 275 basis points.
This was used to part repay existing debt, working
capital and general corporate purposes.
* On demand overdraft facility of GBP3m with an
interest rate of RBS Base Rate plus a margin of 275
basis points. This is to be used to finance
short-term working capital requirements. The
overdraft is subject of a Group set-off arrangement.
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 it was drafted as
an on demand liability. As at 31 December 2011 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 confirmed upon signing the financial statements to
ensure that the directors could prepare the accounts on a going
concern basis. The loan is repayable by 2019.
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 outstanding amount brought forward as at 1 January 2011 was
GBP8.5m. A further GBP6.5m was repaid in October 2011 following the
agreement of new credit facilities with The Royal Bank of Scotland.
The outstanding loan now stands at GBP2m and will be repaid when
there is sufficient working capital. It is not anticipated that the
loan will be repaid in 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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