TIDMPRO
RNS Number : 5275I
Progressive Digital Media Group PLC
26 July 2012
26 July 2012
Progressive Digital Media Group Plc
Unaudited Interim Report For The Six Months Ended 30 June
2012
Progressive Digital Media Group Plc (PDMG) and its subsidiaries
('the Group') is a content driven media company producing premium
business information. The Group enables organisations to gain
competitive advantage by providing unique, high quality information
and services across multiple platforms.
Highlights
Financial performance from continuing operations
-- Adjusted EBITDA(1) increased by 10.3% to GBP4.3m (2011: GBP3.9m).
-- Adjusted EBITDA Margin (1) increased to 16.6% (2011: 15.5%)
-- Group revenue increased by 2.8% to GBP25.9m (2011: GBP25.2m)
with Business Intelligence revenues up by 12.5% to GBP13.5m (2011:
GBP12.0m)
-- Business Intelligence revenues account for 52.1% of Group revenue (2011: 47.6%)
-- Reported profit before tax of GBP2.0m (2011: GBP1.2m)
Key achievements in the six months
-- Good progress has been made in the Business Intelligence
division, (part of our Business Information portfolio), with the
expansion and training of the sales team and the recruitment of
senior sales executives, all of whom are highly experienced in the
sector. The benefits of this are expected to begin to be seen in
the second half of the year.
-- Successful completion of a GBP20m share placing to fund acquisitions.
-- Agreement to acquire Kable, one of the UK's leading providers
of technology expenditure intelligence. Kable provides business
information, tactical intelligence, research, analysis and
consultancy to a number of the UK's leading blue chip companies.
The acquisition completed on 2 July 2012. (Note 8).
-- Exit from the consumer email marketing sector.
Mike Danson, Chairman of Progressive Digital Media Group Plc,
commented:
"Our first half results demonstrate that we have made good
progress across a number of key metrics delivering increased
revenues, margin and earnings against the prior year comparatives.
We continue to focus on those areas which present the best
opportunities for growth such as Business Intelligence, which
pleasingly now accounts for over half of Group revenues. Our
results, together with the fundraising and acquisition of Kable
form not only a good platform for future growth but also have
allowed the Group to exit from the less profitable consumer email
marketing sector. Moreover, the launch of the new intelligence
centres and the performance of our Business Intelligence division
as a whole have positioned us well to develop the business rapidly
from now on."
Note 1: Adjusted EBITDA: Earnings before interest, tax,
depreciation, amortisation, impairment, and share based payments,
and 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.
Note 2: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment. Includes a charge of GBP0.5 million
for share based payments (2011: GBP0.4 million).
Enquiries:
Progressive Digital Media Group Plc 0207 936 6400
Mike Danson, Chairman
Simon Pyper, Group Managing Director
Singer Capital Markets, NOMAD and Broker 0203 205 7500
James Maxwell
Nick Donovan
Hudson Sandler 0207 796 4133
Michael Sandler
CHAIRMAN'S REVIEW
Strong first half results, coupled with a successful fundraising
and the completion of the Kable acquisition (2 July 2012) provide a
solid platform for further growth. Our first half results
demonstrate that we have made good progress across a number of key
metrics delivering increased revenues, margin and earnings against
the prior year comparatives. Additionally, we continue to focus on
those areas which present the best opportunities for growth such as
Business Intelligence, which reported revenue growth of 12.5% for
the period and pleasingly now accounts for over half of Group
revenues.
Our results, together with the fundraising and acquisition of
Kable form not only a good platform for future growth but also have
allowed the Group to exit from the less profitable consumer email
marketing sector.
The successful GBP20 million share placing completed on 30 April
2012 provides the Group with the financial resources to make
further acquisitions which are a strategic fit. The recent
acquisition of Kable is a good example of acquiring a strategic fit
business. Kable, a subscription based business information company
is one of the United Kingdom's leading providers of business
intelligence on technology expenditure. Additionally, Kable has
credible brand equity, industry leading renewal rates and good
opportunities in adjacent markets for future growth. The
acquisition is discussed further in note 8 of these interim
financial statements.
Acquisitions constitute an important part of our growth
strategy. However, we are equally if not more focused on delivering
long term sustainable growth from our organic business and in
particular from our portfolio of Business Intelligence assets.
Pleasingly, our Business Intelligence division performed well in
the first half and we expect this to continue as we realise the
benefits from our investment in our content, our delivery platforms
and our sales infrastructure.
We believe the results for the first six months provide momentum
for the remainder of the year and we are confident that our full
year results will be in line with market estimates.
Group Performance
Group revenues increased by 2.8% to GBP25.9m (2011: GBP25.2m);
with a good performance from Business Intelligence being partially
offset by a rephasing of revenues from our Events and Marketing
business units from the first half of last year to the second half
of this year.
Adjusted EBITDA grew 10.3% to GBP4.3m (2011: GBP3.9m), with
Adjusted EBITDA margin increasing by 1.1% to 16.6% (2011:
15.5%).
Profit before tax increased by GBP0.8m to GBP2.0m (2011:
GBP1.2m), which is after a GBP0.5m non-cash charge for share based
payments following the introduction in January 2011 of the
long-term incentive plan for senior management (2011: GBP0.4m).
Business Information
Business Information, which includes our Business Intelligence
and Events and Marketing business units, now accounts for almost
96% of Group revenues and earnings.
Business Information revenues grew by 4.2% for the first half
(over the corresponding period in 2011) with:
-- Business Intelligence at +12.5%, and
-- Events and Marketing at -5.3%
Events and Marketing revenues were adversely impacted by the
rephasing of a number of events from the first half of last year to
the second half of this year.
B2C Digital Marketing
Given the overall performance of the Group, and our focus on
Business Intelligence, we have decided to withdraw from the legacy
consumer email marketing business. Consequently, we are reporting
this under "discontinued operations" and a loss of GBP1.5m has been
recorded for the first half of the year. Accordingly, our
comparative statements have been restated (Note 5).
Board Changes
We continue to strengthen our management team and the Group has
over the past few months appointed a number of senior executives to
positions within the Group and in particular within our Business
Intelligence division.
Furthermore, we have decided to re-focus the Board and reduce
the number of executive directors to myself and Simon Pyper (Group
Managing Director). Consequently Mark Meek (CEO) and Stephen
Bradley (Finance Director) will be leaving the Board. Stephen
Bradley will remain in his current role and as before will report
to Simon Pyper; however Mark Meek has decided to leave the Group
and the Board would like to thank him for his contribution and
wishes him well for the future.
With the first part of our strategy now complete the Board's
objectives will be to focus on operational excellence and the
continued investment in, and development of, our premium business
information and related products.
Financial review
The Group's statement of financial position at 30 June 2012
reflects the recent share placement completed on 30 April 2012.
Cash and cash equivalents were GBP15.0m (2011 GBP0.4m). Short-term
borrowings which consist of the outstanding amount on the loan that
funded the Canadean acquisition and an instalment of the RBS loan,
have fallen to GBP3.5m (2011 GBP13.4m). Long-term borrowings were
GBP6.2m (2011 GBP9.8m) and represent the remaining loan provided by
RBS falling due after more than one year. At the time of the share
placing an automatic repayment of GBP4m was made to RBS and Michael
Danson converted GBP8m of his subordinated interest free loan to
equity with the Group repaying the remainder of that loan. Net cash
at 30 June is GBP5.3m (2011: net debt of GBP22.7m), with net cash
being cash and cash equivalents less short and long term
borrowings.
Total equity has increased to GBP23.1m (2011 GBP3.2m).
The Group has prepared the accounts on a going concern basis
and, based on current forecasts, the Group will meet its day-to-day
working capital requirements from operating cash flows and existing
banking facilities.
Outlook and prospects
We have had a good first half with revenue and EBITDA growth
ahead of last year and in line with expectations. The completed
fundraising coupled with the acquisition of Kable and the good
performance of our Business Intelligence division provide a strong
footing for the second half of the year and beyond. Whilst we
recognise that the economic climate remains uncertain, we are
confident that we are on the right course and that we will continue
to benefit from our investment in our people, our products and our
delivery platforms.
Mike Danson
Chairman
Independent review report to the members of Progressive Digital
Media Group Plc
Introduction
We have reviewed the condensed set of financial statements in
the half-yearly financial report of Progressive Digital Media Group
Plc for the six months ended 30 June 2012 which comprises the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity and the
consolidated statement of cash flows. We have read the other
information contained in the half yearly financial report (the
Chairman's review) and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company's members, as a body,
in accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the company's
members those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a
body, for our review work, for this report, or for the conclusion
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed
set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity'. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2012 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union.
GRANT THORNTON UK LLP
AUDITOR
London 26 July 2012
Consolidated income statement
Notes 6 months 6 months Year to
to 30 to 30 31 December
June 2012 June 2011 2011
Unaudited Unaudited Audited
GBP000s GBP000s GBP000s
Continuing operations
Revenue 3 25,895 25,180 50,422
Cost of sales (15,555) (14,410) (28,798)
----------------------------------------------- ------ ----------- ----------- -------------
Gross profit 10,340 10,770 21,624
Distribution costs (463) (496) (971)
Administrative costs (6,513) (7,321) (15,353)
Other expenses 4 (1,078) (1,455) (3,329)
----------------------------------------------- ------ ----------- ----------- -------------
Operating profit 2,286 1,498 1,971
Analysed as:
Adjusted EBITDA(2) 4,340 3,943 7,235
Items associated with acquisitions
and restructure of the group 4 (296) - (639)
Other adjusting items 4 (447) (439) (962)
----------------------------------------------- ------ ----------- ----------- -------------
EBITDA(1) 3,597 3,504 5,634
Amortisation (939) (1,625) (2,954)
Depreciation (372) (381) (709)
----------------------------------------------- ------ ----------- ----------- -------------
Operating profit 2,286 1,498 1,971
----------------------------------------------- ------ ----------- ----------- -------------
Finance costs (318) (270) (552)
Profit before tax 1,968 1,228 1,419
Income tax (charge)/credit (442) (689) 110
----------------------------------------------- ------ ----------- ----------- -------------
Profit for the period from continuing
operations 1,526 539 1,529
(Loss)/ profit for the year from discontinued
operation 5 (1,477) 177 (9,349)
Profit/(loss) for the period 49 716 (7,820)
----------------------------------------------- ------ ----------- ----------- -------------
Attributable to:
Equity holders of the parent 26 693 (7,862)
Non-controlling interest 23 23 42
----------------------------------------------- ------ ----------- ----------- -------------
Basic earnings/(loss) per share attributable
to equity holders:
Basic earnings/ (loss) per share (pence) 0.01 0.18 (2.09)
Diluted earnings/ (loss) per share
(pence) 0.01 0.17 (2.09)
----------------------------------------------- ------ ----------- ----------- -------------
The accompanying notes form an integral part of this financial
report.
(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
6 months 6 months Year to
to to 31 December
30 June 30 June 2011
2012 2011 Audited
Unaudited Unaudited
GBP000s GBP000s GBP000s
Profit/(loss) for the period 49 716 (7,820)
Other comprehensive income
Translation of foreign entities 18 35 2
---------------------------------------- ----------- ----------- -------------
Other comprehensive income, net of tax 18 35 2
---------------------------------------- ----------- ----------- -------------
Total comprehensive income/(loss) for
the period 67 751 (7,818)
---------------------------------------- ----------- ----------- -------------
Attributable to
Equity holders of the parent 44 728 (7,860)
Non-controlling interest 23 23 42
---------------------------------------- ----------- ----------- -------------
The accompanying notes form an integral part of this financial
report.
Consolidated statement of financial position
Notes 30 June 30 June 31 December
2012 2011 2011
Unaudited Unaudited Audited
GBP000s GBP000s GBP000s
Non-current assets
Property, plant and equipment 1,373 1,657 1,712
Intangible assets 24,192 35,803 25,106
Deferred tax assets 1,041 561 1,500
----------------------------------- ------ ----------- ----------- ------------
26,606 38,021 28,318
----------------------------------- ------ ----------- ----------- ------------
Current assets
Inventories 324 179 79
Current tax receivable - 42 -
Trade and other receivables 17,944 16,691 17,538
Short-term derivative assets 7 - -
Cash and cash equivalents 14,995 409 2,252
----------------------------------- ------ ----------- ----------- ------------
33,270 17,321 19,869
----------------------------------- ------ ----------- ----------- ------------
Total assets 59,876 55,342 48,187
----------------------------------- ------ ----------- ----------- ------------
Current liabilities
Trade and other payables (24,666) (25,582) (25,221)
Short-term borrowings 7 (3,500) (13,353) (4,807)
Current tax payable (430) (120) (389)
Short-term derivative liabilities - (251) (54)
Short-term provisions (843) (980) (767)
----------------------------------- ------ ----------- ----------- ------------
(29,439) (40,286) (31,238)
----------------------------------- ------ ----------- ----------- ------------
Non-current liabilities
Long-term provisions (863) (1,547) (1,211)
Deferred tax liabilities (257) (434) (372)
Long-term borrowings 7 (6,226) (9,769) (19,936)
Long-term derivative liabilities - (62) -
----------------------------------- ------ ----------- ----------- ------------
(7,346) (11,812) (21,519)
----------------------------------- ------ ----------- ----------- ------------
Total liabilities (36,785) (52,098) (52,757)
----------------------------------- ------ ----------- ----------- ------------
Net assets/(liabilities) 23,091 3,244 (4,570)
----------------------------------- ------ ----------- ----------- ------------
Equity
Share capital 6 153 207 207
Share premium account 6 71,368 44,257 44,257
Other reserve (37,128) (37,128) (37,128)
Foreign currency translation
reserve 25 40 7
Retained loss (11,438) (4,238) (12,010)
----------------------------------- ------ ----------- ----------- ------------
Equity attributable to equity
holders of the parent 22,980 3,138 (4,667)
Non-controlling interest 111 106 97
----------------------------------- ------ ----------- ----------- ------------
Total equity 23,091 3,244 (4,570)
----------------------------------- ------ ----------- ----------- ------------
The accompanying notes form an integral part of this financial
report.
Consolidated statement of changes in equity (unaudited)
Share Share Other Foreign Retained Equity Non-controlling Total
capital premium reserve currency loss attributable interest equity
account translation to
reserve equity
holders
of
the
parent
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1
January 2011 207 44,257 (37,128) 5 (5,305) 2,036 83 2,119
Profit for the
period - - - - 693 693 23 716
Other
comprehensive
income:
Translation of
foreign
entities - - - 35 - 35 - 35
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Total
comprehensive
income
for the period - - - 35 693 728 23 751
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Transactions
with owners:
Share-based
payments - - - - 374 374 - 374
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Balance at 30
June 2011 207 44,257 (37,128) 40 (4,238) 3,138 106 3,244
(Loss)/ profit
for the period - - - - (8,555) (8,555) 19 (8,536)
Other
comprehensive
income:
Translation of
foreign
entities - - - (33) - (33) - (33)
---------------- -------------
Total
comprehensive
(loss)/
income for the
period - - - (33) (8,555) (8,588) 19 (8,569)
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Transactions
with owners:
Dividends - - - - - - (28) (28)
Share based
payments - - - - 783 783 - 783
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Balance at 31
December 2011 207 44,257 (37,128) 7 (12,010) (4,667) 97 (4,570)
Profit for the
period - - - - 26 26 23 49
Other
comprehensive
income:
Translation of
foreign
entities - - - 18 - 18 - 18
Total
comprehensive
income
for the period - - - 18 26 44 23 67
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
Transactions
with owners:
Issue of share
capital 15 27,042 - - - 27,057 - 27,057
Transfer
between
reserves (69) 69 - - - - - -
Dividends - - - - - - (9) (9)
Share based
payments - - - - 508 508 - 508
Excess of
deferred
tax on
share
based
payments
recognised
directly
in equity - - - - 38 38 - 38
---------------- --------- --------- --------- -------------
Balance at 30
June 2012 153 71,368 (37,128) 25 (11,438) 22,980 111 23,091
---------------- --------- --------- --------- ------------- --------- ------------- ---------------- --------
The accompanying notes form an integral part of this financial
report.
Consolidated statement of cash flows
6 months 6 months Year to
to 30 June to 30 June 31 December
2012 2011 2011
Unaudited Unaudited Audited
GBP000s GBP000s GBP000s
Continuing operations
Cash flows from operating activities
Profit for the period 1,526 539 1,529
Adjustments for:
Depreciation 372 381 709
Amortisation 939 1,625 2,954
Finance expense 318 270 552
Taxation expense recognised in
profit or loss 442 689 (110)
Share option charge 508 374 1,157
(Increase)/ decrease in trade and
other receivables (1,751) 30 (612)
Increase in inventories (245) (132) (32)
Decrease in trade payables (524) (1,896) (1,854)
Revaluation of derivatives (61) 65 (195)
Movement in provisions (272) (284) (833)
------------------------------------------- ------------ ------------ -------------
Cash generated from operations 1,252 1,661 3,265
Interest paid (258) (163) (230)
Income taxes received (19) (149) 16
------------------------------------------- ------------ ------------ -------------
Net cash from operating activities 975 1,349 3,051
Cash flows from investing activities
Purchase of property, plant and
equipment (47) (82) (573)
Purchase of intangible assets (150) (72) (516)
------------------------------------------- ------------ ------------ -------------
Net cash used in investing activities (197) (154) (1,089)
Cash flows from financing activities
Proceeds from long-term borrowings - - 11,667
Proceeds from placement of shares 27,057 - -
Repayment of long-term borrowings (13,769) - (6,500)
------------
Net cash generated from financing
activities 13,288 - 5,167
------------------------------------------- ------------ ------------ -------------
Net increase in cash and cash equivalents
from continuing operations 14,066 1,195 7,129
Net (decrease)/ increase in cash
and cash equivalents from discontinued
operations (33) 707 (53)
------------------------------------------- ------------ ------------ -------------
Net increase in cash and cash equivalents 14,033 1,902 7,076
Cash and cash equivalents at beginning
of period 962 (6,114) (6,114)
------------------------------------------- ------------ ------------ -------------
Cash and cash equivalents at end
of period 14,995 (4,212) 962
------------------------------------------- ------------ ------------ -------------
Balance sheet reconciliation:
Cash and cash equivalents 14,995 409 2,252
Overdraft (included in short-term
borrowings) - (4,621) (1,290)
-------------------------------------------- ------------ ------------ -------------
Cash and cash equivalents at end
of period 14,995 (4,212) 962
-------------------------------------------- ------------ ------------ -------------
The accompanying notes form an integral part of this financial
report.
Notes to the interim financial statements
1. General information
Nature of operations
Progressive Digital Media Group Plc and its subsidiaries
(together 'the Group') principal activity is the provision of
premium business information, research services and marketing
solutions for senior level decision makers. Refer to note 3 for
further information about the Group's operating segments.
Progressive Digital Media Group Plc ('the Company') is a company
incorporated in the United Kingdom and listed on the Alternative
Investment Market (AIM). The registered office of the Company is
John Carpenter House, John Carpenter Street, London, EC4Y 0AN. The
registered number of the Company is 3925319.
Basis of preparation
These interim financial statements are for the six months ended
30 June 2012. They have been prepared in accordance with IAS 34,
Interim Financial Reporting. They do not include all of the
information required for full annual financial statements, and
should be read in conjunction with Progressive Digital Media Group
Plc's audited financial statements for the year ended 31 December
2011.
The financial information for the year ended 31 December 2011
set out in this interim report does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31
December 2011 have been filed with the Registrar of Companies and
can be found on the Group's website
www.progressivedigitalmedia.com. The auditor's report on those
financial statements was unqualified and did not contain statements
under Section 498(2) or Section 498(3) of the Companies Act
2006.
These interim financial statements have been prepared under the
historical cost convention as modified by the revaluation of
derivative financial instruments. These interim financial
statements have been prepared in accordance with the accounting
policies detailed in the Group's financial statements for the year
ended 31 December 2011. The accounting policies have been applied
consistently throughout the Group for the purposes of preparation
of these interim financial statements.
The interim financial statements are presented in Pounds
Sterling (GBP), which is also the functional currency of the
Company. These interim financial statements have been approved for
issue by the board of directors.
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 period
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.
Going concern
The Group meets its day-to-day working capital requirements from
an overdraft facility of GBP3.0 million, none of which was utilised
as at 30 June 2012. Based on cash flow projections the Group
considers the existing financing facilities to be adequate to meet
short-term commitments.
The Group has one outstanding loan from the Chairman and
majority shareholder, Michael Danson. The initial loan of GBP9.0
million loan was used to fund the acquisition of Canadean and has
GBP2.0 million outstanding as at 30 June 2012. 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 interim financial statements on a going
concern basis.
Notes to the interim financial statements (continued)
2. Accounting policies
This interim report has been prepared based on the accounting
policies detailed in the Group's financial statements for the year
ended 31 December 2011.
3. Segment analysis
The Group considers the business from a divisional perspective
(Business Information and B2C Digital Marketing).
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 focused on the B2B space, providing
content-rich, web-based information products, via its business
intelligence and events and marketing divisions.
B2C Digital Marketing
B2C Digital Marketing is focused on the B2C market, providing
innovative, online digital marketing, research and panel
solutions.
On 1 April 2012 the Group made the decision to close the TMN
email marketing business unit, including the TMN, EDR and TAPPS
businesses, which formed part of the Group's B2C Digital Marketing
division. Therefore, pursuant to the provisions of IFRS 5 the
operation has been classified as discontinued (see note 5).
Notes to the interim financial statements (continued)
3. Segment analysis (continued)
Six months to June 2012
Unaudited Business B2C Digital
Information Marketing Total
GBP000s GBP000s GBP000s
From continuing operations
Revenue from external customers 24,963 932 25,895
Segment result 9,031 386 9,417
From discontinued operations
Revenue from external customers - (344) (344)
Segment result - (1,138) (1,138)
---------------------------------- ------------- ------------ --------
Six months to June 2011
Unaudited B2C Digital
Business Information Marketing Total
GBP000s GBP000s GBP000s
From continuing operations
Revenue from external customers 23,967 1,213 25,180
Segment result 8,306 750 9,056
From discontinued operations
Revenue from external customers - 2,498 2,498
Segment result - 214 214
---------------------------------- --------------------- ------------ --------
Year to December 2011
Audited B2C Digital
Business Information Marketing Total
GBP000s GBP000s GBP000s
From continuing operations
Revenue from external customers 48,201 2,221 50,422
Segment result 16,956 1,281 18,237
From discontinued operations
Revenue from external customers - 3,931 3,931
Segment result - 77 77
---------------------------------- --------------------- ------------ --------
Notes to the interim financial statements (continued)
3. Segment analysis (continued)
Reconciliation Continuing Continuing Continuing Discontinued Discontinued Discontinued
of segment result operations operations operations operations operations operations
to profit / (loss)
before tax 6 months 6 months Year 6 months 6 months Year to
to to to 31 to to 31 December
30 June 30 June December 30 June 30 June 2011
2012 2011 Unaudited 2011 2012 2011 Unaudited Audited
Unaudited Audited
Unaudited
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Segment result 9,417 9,056 18,237 (1,138) 214 77
Unallocated overheads (5,077) (5,113) (11,002) - - -
Other expenses
(note 4) (1,078) (1,455) (3,329) (325) (25) (9,411)
Depreciation (372) (381) (709) (14) (6) (12)
Amortisation (604) (609) (1,226) - (6) (8)
Finance costs (318) (270) (552) - - (14)
------------------------ ------------ --------------- ------------ -------------- --------------- --------------
Profit/(loss)
before tax 1,968 1,228 1,419 (1,477) 177 (9,368)
------------------------ ------------ --------------- ------------ -------------- --------------- --------------
4. Other expenses
Continuing Continuing Continuing Discontinued Discontinued Discontinued
operations operations operations operations operations operations
6 months 6 months Year 6 months 6 months Year to
to to to 31 to to 31 December
30 June 30 June December 30 June 30 June 2011
2012 2011 Unaudited 2011 2012 2011 Unaudited Audited
Unaudited Audited
Unaudited
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Redundancy and restructuring 301 - 432 200 - -
Property related
provisions (51) - (1) - - -
Deal costs 46 - - - - -
Revaluation of currency
collar (61) 65 (195) - - -
Share option expense 508 374 1,157 - - -
Amortisation of
acquired intangibles 335 1,016 1,728 25 25 50
M&A costs - - 208 - - -
Impairment - - - 100 - 9,361
-------------------------------- ------ --------------- ------------ ------------- --------------- -------------
1,078 1,455 3,329 325 25 9,411
-------------------------------- ------ --------------- ------------ ------------- --------------- -------------
Notes to the interim financial statements (continued)
5. Discontinued operations
On 1 April 2012 the Group made the decision to close the TMN
email marketing business unit, including the TMN, EDR and TAPPS
businesses. The TMN email marketing division formed part of the
Group's B2C Digital Marketing division. Therefore, pursuant to the
provisions of IFRS 5 the operation has been classified as
discontinued.
a) The results of the discontinued operation are as follows;
6 months 6 months Year to
to 30 to 30 31 December
June 2012 June 2011 2011
Unaudited Unaudited Audited
GBP000s GBP000s GBP000s
Discontinued operations
Revenue (344) 2,498 3,931
Cost of sales (560) (1,750) (2,819)
--------------------------------------------- ----------- ----------- -------------
Gross profit (904) 748 1,112
Administrative costs (248) (546) (1,055)
Other expenses (325) (25) (9,411)
--------------------------------------------- ----------- ----------- -------------
Operating (loss)/ profit from discontinued
operations (1,477) 177 (9,354)
Finance costs - - (14)
--------------------------------------------- ----------- ----------- -------------
(Loss)/ profit before tax from discontinued
operations (1,477) 177 (9,368)
Income tax (charge)/credit - - 19
--------------------------------------------- ----------- ----------- -------------
(Loss)/ profit for the period from
discontinued operations (1,477) 177 (9,349)
--------------------------------------------- ----------- ----------- -------------
b). (Loss)/ profit before tax
6 months 6 months Year to
to 30 to 30 31 December
June 2012 June 2011 2011
Unaudited Unaudited Audited
This is arrived after charging: GBP000s GBP000s GBP000s
Depreciation 14 6 12
Amortisation - 6 8
Amortisation of acquired intangible
assets 25 25 50
Impairment of intangible asset 100 - 9,361
------------------------------------- ----------- ----------- -------------
c). Cash flows from discontinued operations
6 months 6 months Year to
to 30 to 30 31 December
June 2012 June 2011 2011
Unaudited Unaudited Audited
GBP000s GBP000s GBP000s
Cash flows from operating activities (33) 712 (47)
Cash flows from investing activities - (5) (6)
------------------------------------------------ ----------- ----------- -------------
Net cash (outflows)/ inflows from discontinued
operations (33) 707 (53)
Notes to the interim financial statements (continued)
6. Equity
Authorised share capital:
30 June 30 June 31 Dec
2012 2011 2011
GBP'000s GBP'000s GBP'000s
1,000,000,000 Ordinary shares
of GBP0.0001 each 100 100 100
100,000 Deferred shares of GBP1.00
each 100 100 100
200 200 200
--------------------------------------- ----- --------- --------- ---------
Allotted, called up and
fully paid:
30 June 2012 30 June 2011 31 December
2011
No'000 GBP'000 No'000 GBP'000 No'000 GBP'000
Ordinary shares at 1 January
(GBP0.0001) 376,492 107 376,492 107 376,492 107
Issued in the year 155,556 15 - - - -
Transfer to share premium - (69) - - - -
------------------------------ -------- -------- -------- -------- -------- --------
Ordinary shares c/f 532,048 53 376,492 107 376,492 107
Deferred shares of GBP1.00
each 100 100 100 100 100 100
---------------------------- -------- ---- -------- ---- -------- ----
532,148 153 376,592 207 376,592 207
---------------------------- -------- ---- -------- ---- -------- ----
The Company has two classes of shares. The ordinary shares carry
no right to fixed income and each share carries the right to one
vote at general meetings of the Company.
The deferred shares do not confer upon the holders the right to
receive any dividend, distribution or other participation in the
profits of the Company. The deferred shares do not entitle the
holders to receive notice of or to attend and speak or vote at any
general meeting of the Company. On distribution of assets on
liquidation or otherwise, the surplus assets of the Company
remaining after payments of its liabilities shall be applied first
in repaying to holders of the deferred shares the nominal amounts
and any premiums paid up or credited as paid up on such shares, and
second the balance of such assets shall belong to and be
distributed among the holders of the ordinary shares in proportion
to the nominal amounts paid up on the ordinary shares held by them
respectively.
During the period the Group issued 155,555,555 ordinary shares
with a nominal value of GBP15,556 which were subscribed for at a
price of 18 pence per share. The gross consideration for this
subscription was GBP28million.
The issue of 111,111,111 shares was a result of the placing of
Ordinary shares by Singer Capital Markets (the "Placing"), which
raised gross funds of GBP20million. The Directors intend that the
net proceeds will be used to fund growth opportunities and in
particular to finance complementary acquisitions in the Business
Information market. As part of the banking agreement with The Royal
Bank of Scotland, GBP4million of the funds were used to repay
borrowings.
Simultaneously with the Placing, the Chairman Michael Danson,
entered into a capitalisation agreement to convert GBP8million of a
non-interest bearing loan of GBP9,768,871 into 44,444,444 ordinary
shares at the Placing price of 18 pence per share.
Following the Placing and the Capitalisation, Michael Danson's
shareholding in the Group is 67.72% (31 December 2011: 83.89%)
Notes to the interim financial statements (continued)
The amount recognised within share premium as a result of the
Placing and Capitalisation was GBP27.1million, which is analysed as
follows;
GBPm
Gross funds of the Placing 20.0
Capitalisation of loan 8.0
Commission paid to Singer Capital Markets (4%) (0.8)
Legal fees associated to the Placing (0.1)
Net funds 27.1
7. Borrowings
30 June 30 June 2011 31 December
2012 2011
GBP000s GBP000s GBP000s
Current
Bank overdraft - 4,621 1,290
Loans due within one year 3,500 8,732 3,517
--------------------------- -------- ------------- ------------
3,500 13,353 4,807
Non-current
Long-term loans 6,226 9,769 19,936
--------------------------- -------- ------------- ------------
Outstanding loans consist of one loan provided by Michael Danson
as well as two facilities provided by The Royal Bank of Scotland,
which were issued in 2011. Of The Royal Bank of Scotland loans,
GBP1.5million is due for repayment within the year.
Current
The Group currently has a GBP3 million overdraft facility, which
was not drawn down upon at 30 June 2012. Interest is charged on the
overdraft at 2.5% over the London Interbank Offered Rate.
A GBP9 million loan was provided by Michael Danson to fund the
acquisition of Canadean. The loan has an interest rate of 275 basis
points over the 3-month London Interbank Offered Rate, in line with
the current rate on Progressive's term loan with the Royal Bank of
Scotland. This loan has GBP2.0 million outstanding as at 30 June
2012.
Non-current
GBP12 million loan provided by The Royal Bank of Scotland
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.
As part of the Placing (discussed in note 6) GBP4million of the
term loan was repaid to The Royal Bank of Scotland, pursuant to the
banking agreement. As at 30 June 2012, GBP2 million of the term
loan and GBP6 million revolving capital facility were outstanding.
GBP1.5million of the term loan is due for repayment in October 2012
and as such has been classified as a short term liability.
Also, as part of the Placing (discussed in note 6); Michael
Danson converted GBP8million of his GBP9.8million interest free
loan into equity. The remaining GBP1.8million was used to offset an
amount owed by World Market Intelligence, a company wholly owned by
Michael Danson.
Notes to the interim financial statements (continued)
8. Acquisition
The assets of Kable, a division of Guardian News & Media
Limited, were acquired on 2 July 2012. Kable is one of the UK's
leading providers of technology expenditure intelligence providing
business information, tactical intelligence, research, analysis and
consultancy to a number of the UK's leading blue chip companies.
Kable is a strategic fit business, delivering subscription based
business information services with a strong brand, industry leading
renewal rates and good growth opportunities in adjacent markets.
The initial accounting for the acquisition has not been finalised
hence an estimate of the financial effect of the transaction cannot
yet be made.
9. Related party transactions
Michael Danson, Progressive Digital Media Group's Chairman, owns
67.72% of the Company's ordinary shares as at 30 June 2012. Michael
Danson owns a number of businesses that interact with Progressive
Digital Media Group. The principal transactions are as follows:
Accommodation
Following the sale of the freehold property, Progressive Digital
Media Group entered into a property lease with Estel Property
Investments for a period of 25 years. In September 2009,
Progressive Digital Media Group entered into a second lease with
Estel Property Investments for another property for a period of 25
years. The buildings are also occupied by a number of other
businesses that are owned by Michael Danson (see below). The Group
recharges rental expenses to these companies based on the
proportional occupancy of the buildings. The total rental expense
in relation to the buildings owned by Estel Property Investments
for the 6 months to 30 June 2012 was GBP842,817 net of a recharge
of GBP283,983 to the other companies occupying the buildings (2011:
GBP949,969 net of a recharge of GBP201,940).
Corporate support services
Corporate support services are provided to the other companies
owned by Michael Danson, principally finance, human resources, IT
and facilities management. These are recharged to companies that
consume these services based on specific drivers of costs, such as
proportional occupancy of buildings for facilities management,
headcount for human resources services, revenue or gross profit for
finance services and headcount for IT services. The recharge made
from Progressive Digital Media Group to these companies for the 6
months to 30 June 2012 was GBP749,800 (2011: GBP630,928).
Revenue License Agreement
During the previous year, Progressive Digital Media Group
entered into a licensing agreement with World Marketing
Intelligence Ltd ("WMI"), wholly owned by Mike Danson, to sell
WMI's Construction Intelligence Center ("CIC") content through the
Group's own websites. Under the terms of the agreement, 20% of
revenue generated from the sale of CIC content is payable to WMI.
The total revenue recognised in Progressive Digital Media Group for
the 6 months to 30 June 2012 is GBP0.4 million.
Loans
Michael Danson has provided loans to the Group during the
periods presented.
-- A GBP9.8 million loan issued in 2009 and repayable by 2019.
During the period, GBP8.0 million was converted into 44,444,444
ordinary shares at the Placing price of 18 pence per share. The
remaining GBP1.8million was used to repay a debt owed by World
Market Intelligence Ltd, a company wholly owned by Michael Danson.
The loan carried no interest.
-- A GBP9 million loan for the Canadean acquisition, repayable
by 2013, or earlier subject to Board approval. GBP2 million is
outstanding as at 30 June 2012. This loan accrues interest at a
rate of 275 basis points over the 3 month London Interbank Offered
Rate, in line with the current rate on Progressive's term loan with
the Royal Bank of Scotland.
--
Notes to the interim financial statements (continued)
Amounts outstanding
The Group has taken advantage of the exemptions contained within
IAS 24 - Related Party Disclosures from the requirement to disclose
transactions between Group companies as these have been eliminated
on consolidation.
The amounts outstanding for other related parties, excluding the
loans from Michael Danson, were:
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
Global Data Ltd (69) (152) (11)
World Marketing Intelligence Ltd 4,477 3,200 4,515
New Statesman Ltd 2,114 1,685 1,916
Estel Investments Ltd - (4) 3
Estel Investments No. 2 Ltd 291 290 290
Estel Investments No. 3 Ltd (753) (249) (596)
Progressive Media International Ltd 410 415 404
Estel Property Investments Ltd (4,630) (3,176) (4,652)
Elite Ltd 428 97 314
Spears Ltd 204 138 184
Progressive Customer Publishing Ltd 145 - 4
Progressive Media Publishing Ltd 2 2 -
Progressive Innovations Ltd (3) - -
Progressive Media UK Ltd 76 - -
------------------------------------- -------- -------- ------------
2,692 2,246 2,371
------------------------------------- -------- -------- ------------
The company has right of set off over these amounts.
Advisers
Company Secretary
Stephen Bradley
Head Office and Registered Office
John Carpenter House
John Carpenter Street
London
EC4Y 0AN
Tel: + 44 (0) 20 7936 6400
Nominated Adviser and Broker
Singer Capital Markets Limited
One Hanover Street
London
W1S 1YZ
Auditor
Grant Thornton UK LLP
Grant Thornton House
Melton Street
London
NW1 2EP
Registrars
Capita Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0GA
Bankers
The Royal Bank of Scotland plc
280 Bishopsgate
London
EC2M 4RB
Registered number
Company No. 3925319
This information is provided by RNS
The company news service from the London Stock Exchange
END
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