TIDMPRO
RNS Number : 5276Y
Progressive Digital Media Group PLC
25 February 2013
25 February 2013
Progressive Digital Media Group Plc
Preliminary Results For The Year Ended 31 December 2012
"Record results, improved cash generation and continued
investment for future growth"
Progressive Digital Media Group Plc ('the Group') produces
premium business information which enables organisations to gain
competitive advantage by providing unique, high quality information
and services across multiple platforms.
Highlights
Key achievements in 2012
-- Significant investment in new products and delivery platforms
-- Strong revenue and earnings growth
-- Strong balance sheet with cash and bank facilities to fund future acquisitions
-- Acquisition of Kable, one of the UK's leading providers of
technology expenditure intelligence on 2 July 2012
-- Normalisation of capital structure through proposed share
consolidation and re-capitalisation of reserves
Financial performance
-- Group revenue increased by 6.9% to GBP53.9m (2011: GBP50.4m)
-- Adjusted EBITDA(1) increased by 25.6% to GBP9.1m (2011: GBP7.2m)
-- Adjusted EBITDA margin(1) increased to 16.9% (2011: 14.4%)
-- Reported EBITDA(2) increased by 31.8% to GBP7.4m (2011: GBP5.6m)
-- Reported profit before tax of GBP4.3m (2011: GBP1.4m)
inclusive of GBP0.9m restructuring costs and GBP0.8m share based
payment charge
-- Cash generated from operations increased to GBP6.4m (2011: GBP2.9m)
-- Net cash(3) of GBP6.2m (2011: net debt GBP22.5m)
Our business
-- Premium business information services covering the Consumer and Technology markets
-- A strong and scalable asset base
-- Significant contracted and visible revenue streams
-- Globally exploitable business model
-- High gross margin product
Simon Pyper, Managing Director of Progressive Digital Media
Group Plc, commented:
"This is the Group's fourth consecutive year of revenue and
earnings growth. We have made good progress across a broad range of
our most important metrics. This past year we focused on putting in
place the building blocks for future long-term growth and
eliminating the distractions of our former email marketing
business. We continued investing in our Business Information
products, acquired a complementary business and re-engineered our
balance sheet to both fund future growth and, when appropriate, to
distribute dividends to our shareholders."
Note 1: 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.
Note 2: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment. Includes a charge of GBP0.8 million
for share based payment (2011: GBP1.2 million).
Note 3: Net cash/ (net debt): Cash less short and long-term
borrowings.
Enquiries:
Progressive Digital Media Group Plc 0207 936 6400
Mike Danson, Chairman
Simon Pyper, Managing Director
N+1 Singer 0207 496 3000
James Maxwell
Nick Donovan
Hudson Sandler 0207 796 4133
Nick Lyon
CHAIRMAN'S STATEMENT
It has been another year of significant progress; the Group has
not only delivered a robust set of financial results but also
exited from the consumer email marketing sector, completed the
acquisition of Kable and raised GBP20 million from an
over-subscribed share placement. Moreover, our results remain
tempered by the significant investment in our Business Intelligence
content sets and delivery platforms which form the building blocks
for future growth. That so much was achieved during a period of
sustained weak economic conditions is encouraging and gives us
confidence in our business model, our strategy and our
delivery.
Our business model
We are a content driven media company producing premium business
information. We supply our customers with research, analysis and
tactical intelligence across a multiple of platforms, which enables
our customers to gain a competitive advantage in their markets. 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 profit growth and margin. Its key
features are:
1. Premium business information services covering the Consumer and Technology markets
2. A strong and scalable asset base
3. Significant contracted and visible revenue streams including digital subscriptions
4. Globally 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.
Kable is a good example of acquiring a strategic fit business.
It is a subscription based business information company providing
Business Intelligence on technology expenditure. Furthermore,
Kable's product set can be extended to additional geographies,
developed for adjacent verticals and has, since acquisition, been
able to leverage our operational infrastructure to increase both
revenues and margin. Pleasingly, performance since acquisition has
been in line with expectations, which has allowed us to accelerate
our investment in the Kable product set.
Capital structure
The GBP20 million share placement (completed on 30 April 2012),
coupled with the proposed share consolidation and
re-capitalisation, will allow the Group to re-engineer its balance
sheet to one more fitting with its needs. In doing so, the Group
will have a balance sheet which will support further acquisitions
and a capital structure which will, when appropriate, allow the
Group to distribute dividends to our diverse investor base. Further
details will be set out in a circular to be published in April.
Current trading and outlook
Whilst the economic environment remains uncertain, we are
confident that we are positioned for future growth and we therefore
expect to make further progress during 2013.
Mike Danson
Chairman
25 February 2013
MANAGING DIRECTOR'S REVIEW
This is the Group's fourth consecutive year of revenue and
earnings growth. We have made good progress across a broad range of
our most important metrics. This past year we focused on putting in
place the building blocks for future long-term growth and
eliminating the distractions of our former email marketing
business. We continued investing in our Business Information
products, acquired a complementary business and re-engineered our
balance sheet to both fund future growth and, when appropriate, to
distribute dividends to our shareholders.
We have a simple, clearly defined and well understood strategy;
to become a leading provider of must have premium business
information, focused on global verticals.
Building blocks for growth:
The Group aims to deliver its strategy by focusing on four key
areas of building blocks for growth:
-- Focus on global industry verticals such as Consumer and Technology
-- Premium Content, where the intellectual property is
internally generated and exploited across multiple platforms
-- Common systems and processes across the Group, driving efficiencies and margin improvement
-- Acquire complementary and strategic fit business assets or companies
Operational review
Trading conditions in our markets were broadly benign: however a
lack of growth does not always equate to a lack of opportunity. In
2012, the Group achieved growth in its key verticals and
geographies and that this was achieved ahead of seeing the full
benefit from our investment in Business Intelligence content and
delivery platforms is more than satisfactory.
The Group has also completed many internal change programmes
during the year, which should put the Group in a better position to
deliver both revenue and earnings growth for the medium to long
term. Branding has been one such change programme, where we have
aligned our principal Business Information products under the
Canadean brand. The Canadean brand is well regarded in its existing
verticals and we believe can be effectively leveraged across new
and adjacent verticals.
A second change programme relates to our internal processes and
systems; the Group now benefits from a common customer relationship
management system, a common content management system and a common
content delivery system. There are numerous benefits associated
with having common systems and processes, not least of which are
operational efficiencies and margin enhancement through improved
productivity and lower running costs.
Another change programme relates to structure; during the year
we aligned our management structure to better reflect our markets
and product offering. Business Intelligence for example is now
served by both an Account Management team and a separate Business
Development team. Our expectation is that the Business Development
team will secure new business for the Group whilst the Account
Management team focuses on increasing renewal rates both by volume
and value.
Looking ahead
There has been a significant amount of change across the Group
as we put in place the building blocks for growth. Change can often
cause disruption, and that so much was achieved during the year and
at the same time delivering a robust financial performance is
testimony to the professionalism, hard work and commitment of our
staff. I would like to take this opportunity to express my thanks
to all our staff and to congratulate them for an excellent
performance.
The key objectives for the forthcoming year are:
-- Focus on high-quality, subscription based Business Information services and products
-- Expand our geographic footprint in high-growth consumer
markets, such as China, India, Latin America and Australasia
-- Focus on long-term margin improvement
We set for ourselves both high expectations and ambitious
targets, and our results for 2012 are but one step in the right
direction.
Simon Pyper
Managing Director
25 February 2013
FINANCIAL REVIEW
Financially the Group has performed well with improved revenues,
earnings and cash generation. The GBP20 million share placement
(completed April 2012), coupled with the proposed share
consolidation and re-capitalisation, provides the Group with a
strong balance sheet to fund future growth and a capital structure
which will, when appropriate, allow dividends to be distributed to
shareholders.
Financial highlights
-- Increased the Group's revenue by 6.9% year on year
-- Increased Adjusted EBITDA margins by 2.5% to 16.9%
-- Increased profitability at the Adjusted EBITDA level by 25.6%
-- Funds generated from operations increased by GBP3.5m to GBP6.4m
-- Bank debt reduced by GBP6.8m to GBP6.5m (2011: GBP13.3m)
2012 2011
Continuing operations GBP000s GBP000s
Revenue 53,902 50,422 6.9%
Profit before tax 4,291 1,422
Depreciation 732 709
Amortisation 1,930 2,955
Finance costs 479 552
-------------------------------- -------- -------- ------
EBITDA(1) 7,432 5,638 31.8%
Restructuring costs 908 432
Property related provisions (166) (1)
Revaluation of currency collar (36) (195)
Share option expense 829 1,157
Exceptional property costs 75 -
M&A costs 17 208
Deal costs 31 -
-------------------------------- -------- -------- ------
Adjusted EBITDA(2) 9,090 7,239 25.6%
-------------------------------- -------- -------- ------
Adjusted EBITDA % 16.9% 14.4%
-------------------------------- -------- -------- ------
Note 1: EBITDA: Earnings before interest, tax, depreciation,
amortisation and impairment. Includes a charge of GBP0.8 million
for share based payments (2011: GBP1.2 million).
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.
Continuing operations
The focus for 2012 was to increase earnings and margins, improve
cash generation and to re-engineer our balance sheet to one more
appropriate to our needs. I am pleased to report that we have made
significant progress and have achieved much of what we set out to
do. Furthermore, with the exit from the consumer email marketing
business, the Group is now solely focused on Business Information
and in particular the development, acquisition and provision of
subscription based information products.
Looking ahead our focus for 2013 will be similar to that of
2012; to improve both earnings and margins and to increase cash
generation.
Acquisition of Kable
We announced on 2 July 2012 that the Group had acquired the
business and assets of Kable for cash consideration of GBP2.3
million. Kable is 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. For the financial
year ended 31 December 2011, Kable reported revenues of
approximately GBP1.8m. The acquisition of Kable was funded by the
utilisation of GBP2.3 million of the funds raised as part of the
share placing on 30 April 2012.
Discontinued operations
During the year the business exited from the legacy consumer
email marketing sector which was both loss making and of poor
strategic fit. Consequently, a loss of GBP1.8 million has been
recorded in our Consolidated Income Statement under "Discontinued
operations". In terms of cash consumption, the exit from the email
marketing business utilised GBP1.3 million of the Group's cash
resources in 2012.
Earnings per share
Basic profit per share from continuing operations was 0.99 pence
per share (2011: profit of 0.41 pence per share).
Cash flow
The Group generated GBP9.1 million of adjusted EBITDA in 2012,
which excludes GBP0.5 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 GBP6.4 million.
Capital expenditure was GBP0.5 million in 2012 (GBP1.1 million
in 2011). This included GBP0.3 million on software.
During the year, the Group has generated GBP9.8 million from
financing activities, which includes net funds of GBP19.1 million
from the placement of shares and GBP8 million from the
capitalisation of Group loans on 30 April 2012. The Group also
repaid long-term borrowings of GBP17.3 million.
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 movements 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. The Group meets
its day-to-day working capital requirements from an overdraft
facility of GBP3 million, which was not utilised as at 31 December
2012.
As part of the share placing, on 30 April 2012, GBP4.0 million
of the term loan was repaid to The Royal Bank of Scotland, pursuant
to the banking agreement and a further GBP1.5m was repaid to the
bank in October 2012 in accordance with the original repayment
terms. At 31 December 2012, GBP0.5 million of the term loan and
GBP6 million of the revolving capital facility remained
outstanding. GBP0.5 million of the term loan is due for repayment
in October 2013, in accordance with the original repayment
schedule; as such this has been classified as a short term
liability.
Also, as part of the share placing, Mike Danson converted GBP8
million of his GBP9.8 million interest free loan into equity with
the remaining GBP1.8 million being settled against balances owed by
World Market Intelligence Ltd, a company wholly owned by Mike
Danson. At 31 December 2012, the Group had no loans outstanding
with Mike Danson.
Based on cash flow projections, the Group considers the existing
financing facilities to be adequate to meet short-term commitments.
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.
Simon Pyper
Managing Director
25 February 2013
Consolidated Income Statement
Notes Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Continuing operations
Revenue 3 53,902 50,422
Cost of sales (31,573) (28,798)
--------------------------------------- ------ ------------- -------------
Gross profit 22,329 21,624
Distribution costs (914) (971)
Administrative costs (14,246) (15,300)
Other expenses 4 (2,399) (3,379)
--------------------------------------- ------ ------------- -------------
Operating profit 4,770 1,974
Analysed as:
Adjusted EBITDA(2) 9,090 7,239
Items associated with acquisitions
and restructure of the group 4 (1,694) (1,796)
Other adjusting items 4 36 195
--------------------------------------- ------ ------------- -------------
EBITDA(1) 7,432 5,638
Amortisation (1,930) (2,955)
Depreciation (732) (709)
--------------------------------------- ------ ------------- -------------
Operating profit 4,770 1,974
--------------------------------------- ------ ------------- -------------
Finance costs (479) (552)
Profit before tax from continuing
operations 4,291 1,422
Income tax credit 476 109
--------------------------------------- ------ ------------- -------------
Profit for the year from continuing
operations 4,767 1,531
Loss for the year from discontinued
operations 8 (1,814) (9,351)
Profit/(loss) for the period 2,953 (7,820)
--------------------------------------- ------ ------------- -------------
Attributable to:
Equity holders of the parent 2,935 (7,862)
Non- controlling interest 18 42
--------------------------------------- ------ ------------- -------------
Basic profit per share attributable
to equity holders from continuing
operations: 5
Basic profit per share (pence) 0.99 0.41
Diluted profit per share (pence) 0.92 0.37
Basic loss per share attributable
to equity holders from discontinued
operations (0.38) (2.48)
--------------------------------------- ------ ------------- -------------
(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, restructure of the
Group, share based payments and impact of foreign exchange
contracts. See note 4 of the preliminary 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. EBITDA and Adjusted EBITDA are not measures of
financial performance under IFRS and should not be considered as an
alternative to operating profit/loss or as a measure of liquidity
or an alternative to loss/profit for the year as indicators of our
operating performance or any other measure of performance derived
in accordance with IFRS.
Consolidated Statement of Comprehensive Income
2012 2011
GBP000s GBP000s
Profit/ (loss) for the year 2,953 (7,820)
Other comprehensive income
Translation of foreign entities 18 2
Other comprehensive income, net of tax 18 2
-------------------------------------------- -------- --------
Total comprehensive profit/ (loss) for the
year 2,971 (7,818)
-------------------------------------------- -------- --------
Attributable to
Equity holders of the parent 2,953 (7,860)
Non-controlling interest 18 42
-------------------------------------------- -------- --------
Consolidated Statement of Financial Position
Notes 31 December 2012 31 December 2011
GBP000s GBP000s
Non-current assets
Property, plant and equipment 1,164 1,712
Intangible assets 26,383 25,106
Deferred tax assets 2,327 1,500
----------------------------------------------------- ---------- ------------------- ---------------------
29,874 28,318
----------------------------------------------------- ---------- ------------------- ---------------------
Current assets
Inventories 180 79
Trade and other receivables 17,354 17,538
Cash and cash equivalents 12,497 2,252
----------------------------------------------------- ---------- ------------------- ---------------------
30,031 19,869
----------------------------------------------------- ---------- ------------------- ---------------------
Total assets 59,905 48,187
----------------------------------------------------- ---------- ------------------- ---------------------
Current liabilities
Trade and other payables (25,274) (25,221)
Short-term borrowings 6 (500) (4,807)
Current tax payable (419) (389)
Short-term derivative liabilities (18) (54)
Short-term provisions (665) (767)
----------------------------------------------------- ---------- ------------------- ---------------------
(26,876) (31,238)
----------------------------------------------------- ---------- ------------------- ---------------------
Non-current liabilities
Long-term provisions (679) (1,211)
Deferred tax liabilities - (372)
Long-term borrowings 6 (5,767) (19,936)
----------------------------------------------------- ---------- ------------------- ---------------------
(6,446) (21,519)
----------------------------------------------------- ---------- ------------------- ---------------------
Total liabilities (33,322) (52,757)
----------------------------------------------------- ---------- ------------------- ---------------------
Net assets/ (liabilities) 26,583 (4,570)
----------------------------------------------------- ---------- ------------------- ---------------------
Equity
Share capital 7 153 207
Share premium account 71,368 44,257
Other reserve (37,128) (37,128)
Foreign currency translation reserve 25 7
Retained loss (7,942) (12,010)
----------------------------------------------------- ---------- ------------------- ---------------------
Equity attributable to equity holders of the parent 26,476 (4,667)
Non-controlling interest 107 97
----------------------------------------------------- ---------- ------------------- ---------------------
Total equity 26,583 (4,570)
----------------------------------------------------- ---------- ------------------- ---------------------
Consolidated Statement of Changes in Equity
Share Share Other Foreign Retained Equity Non Total
capital premium reserve translation loss attributable -controlling equity
account reserve to equity interest
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
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
(Loss)/profit for the
year - - - - (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 based
payment - - - - 1,157 1,157 - 1,157
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
Balance at 31
December
2011 207 44,257 (37,128) 7 (12,010) (4,667) 97 (4,570)
Profit for the period - - - - 2,935 2,935 18 2,953
Other comprehensive
income:
Translation of
foreign
entities - - - 18 - 18 - 18
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
Total comprehensive
income for the year - - - 18 2,935 2,953 18 2,971
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
Transactions with
owners:
Issue of share
capital 15 27,042 - - - 27,057 - 27,057
Transfer between
reserves (69) 69 - - - - - -
Dividends - - - - - - (8) (8)
Share based
payment - - - - 829 829 - 829
Excess deferred
tax
on share based
payments - - - - 304 304 - 304
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
Balance at 31
December
2012 153 71,368 (37,128) 25 (7,942) 26,476 107 26,583
---------------------- -------- -------- --------- ------------ --------- ------------- ------------- --------
Consolidated Cash Flow Statement
Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Cash flows from continuing operating activities
Profit for the period 4,767 1,531
Adjustments for:
Depreciation 732 709
Amortisation 1,930 2,955
Finance expense 479 552
Taxation recognised in profit or loss (476) (109)
Share option charge 829 1,157
Increase in trade and other receivables (1,117) (2,028)
Increase in inventories (101) (32)
Decrease in trade payables (23) (824)
Revaluation of derivatives (36) (195)
Movement in provisions (634) (833)
------------------------------------------------- ------------- -------------
Cash generated from operations 6,350 2,883
Interest paid (408) (215)
Income taxes (paid)/ received (103) 16
------------------------------------------------- ------------- -------------
Net cash from operating activities 5,839 2,684
Cash flows from investing activities
Acquisition of Kable (2,300) -
Purchase of property, plant and equipment (207) (573)
Purchase of intangible assets (271) (522)
------------------------------------------------- ------------- -------------
Net cash used in investing activities (2,778) (1,095)
Cash flows from financing activities
Proceeds from long-term borrowings - 11,667
Proceeds from capitalisation of debt 8,000 -
Proceeds from placement of shares 19,057 -
Repayment of long-term borrowings (17,269) (6,500)
Dividends paid to non-controlling interests (8) (28)
-------------
Net cash generated from financing activities 9,780 5,139
------------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents
from continuing operations 12,841 6,728
Net (decrease)/ increase in cash and cash
equivalents from discontinued operations (1,306) 348
------------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents 11,535 7,076
Cash and cash equivalents at beginning
of period 962 (6,114)
------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 12,497 962
------------------------------------------------- ------------- -------------
Balance sheet reconciliation:
Cash and cash equivalents 12,497 2,252
Overdraft (included in short-term borrowings) - (1,290)
-------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 12,497 962
-------------------------------------------------- ------------- -------------
The accompanying notes form an integral part of this financial
report.
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 2012 and should be read in conjunction
with the Annual Report and Accounts for the year ended 31 December
2011 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 2012. The
auditors have reported on the Group's statutory accounts for the
year ended 31 December 2012 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 2012 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 sub-let 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 intangible assets separate from goodwill
that consist of assessing the value of brands, software and
customer relationships.
Provisions 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 indefinite life
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.
At 31 December 2012 the Group had GBP26.4 million of goodwill
and other intangibles assets (2011: GBP25.1 million).
Going concern
The Group meets its day-to-day working capital requirements from
an overdraft facility of GBP3.0 million, which was not utilised as
at 31 December 2012.
Based on cash flow projections, the Group considers the existing
financing facilities to be adequate to meet short-term commitments.
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 2012.
3. Segmental analysis
Segmental results
Following the discontinuation of the B2C email marketing
business on 1 April 2012, the Group now considers the business as a
single operating segment.
The group 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.
Reconciliation of segment contribution to profit before tax
Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Segment contribution 18,857 18,109
Central overheads (9,767) (10,870)
Other expenses (see note 4) (2,399) (3,379)
Depreciation (732) (709)
Amortisation (1,189) (1,177)
Finance costs (479) (552)
Profit before tax 4,291 1,422
----------------------------- ------------- -------------
Central overheads consists of corporate, HR, finance, IT and
facilities expenses.
Geographical analysis
From continuing operations
Year ended 31 December 2012 UK Europe Rest of World Total
GBP000s GBP000s GBP000s GBP000s
Revenue from external customers 17,622 20,007 16,273 53,902
--------------------------------- -------- -------- -------------- --------
Year ended 31 December 2011 UK Europe Rest of World Total
GBP000s GBP000s GBP000s GBP000s
Revenue from external customers 15,993 20,297 14,132 50,422
--------------------------------- -------- -------- -------------- --------
4. Other expenses
Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Restructuring costs 908 432
Property related provisions (166) (1)
Exceptional property costs 75 -
Deal costs 31 -
Revaluation of currency collar (36) (195)
Share option expense 829 1,157
M&A costs 17 208
Amortisation of acquired intangibles 741 1,778
2,399 3,379
-------------------------------------- ------------- -------------
- Redundancy costs relate to redundancies made during the year
that were announced prior to 31 December 2012.
- Property related provisions relate to the consolidated income
statement impact on the provision made for onerous properties and
dilapidations.
- Exceptional property costs relate to additional costs incurred
on properties that are not occupied and are provided for within the
onerous lease provision.
- Deal costs represent costs incurred in respect of the loans
issued by the Royal Bank of Scotland in 2011.
- The revaluation of currency collar relates to movement in the
fair value of the short and long term derivatives.
- The share option expense relates to the share option plan.
- The M&A costs relate to the acquisition of Kable. See note 9.
5. Earnings per share
The calculation of the basic earnings per share is normally
based on the earnings attributable to ordinary shareholders of the
parent company divided by the weighted average number of shares in
issue during the period.
The Group has a share options scheme in place and therefore the
Group has calculated the dilutive effect of these options. The
below table shows earnings per share for both continuing and
discontinued operations:
Year ended Year ended
31 December 31 December
2012 2011
Continuing operations
Basic
Profit for the period attributable to
ordinary shareholders of the parent company
(GBP'000s) 4,767 1,531
Weighted average number of shares (000s) 480,906 376,492
Basic profit per share (pence) 0.99 0.41
Diluted
Profit for the period attributable to
ordinary shareholders of the parent company
(GBP'000s) 4,767 1,531
Weighted average number of shares (000s) 516,129 412,237
Diluted profit per share (pence) 0.92 0.37
Discontinued operations
Basic
Loss for the period attributable to ordinary
shareholders of the parent company (GBP'000s) (1,814) (9,351)
Weighted average number of shares (000s) 480,906 376,492
Basic loss per share (pence) (0.38) (2.48)
Diluted
Loss for the period attributable to ordinary
shareholders of the parent company (GBP'000s) (1,814) (9,351)
Weighted average number of shares (000s) 480,906 376,492
Diluted loss per share (pence) (0.38) (2.48)
Reconciliation of basic weighted average Number
number of share to the diluted weighted
average number of shares:
000s
Basic weighted average number of shares 480,906
Share options in issue at 31 December
2012 35,223
------------------------------------------- --------
Diluted weighted average number of shares 516,129
------------------------------------------- --------
6. Borrowings
31 December 31 December
2012 2011
GBP000s GBP000s
Current
Bank overdraft - 1,290
Long-term loans due within one year 500 3,517
------------------------------------- ------------ ------------
500 4,807
Non-current
Long-term loans 5,767 19,936
------------------------------------- ------------ ------------
Outstanding loans consist of two facilities provided by the
Royal Bank of Scotland, which were issued in 2011. Of the Royal
Bank of Scotland loans, GBP0.5million is due for repayment within
the year.
Current
The Group currently has a GBP3.0 million overdraft facility,
which was not drawn down upon at 31 December 2012. Interest is
charged on the overdraft at 2.5% over the London Interbank Offered
Rate.
There is GBP0.5 million outstanding on the GBP6 million term
loan issued by The Royal Bank of Scotland, all of which is due
within one year.
Non-current
GBP12 million loan provided by The Royal Bank of Scotland
In October 2011, the Group refinanced its debt position. A
GBP6.0 million term loan and a GBP6.0 million revolving capital
facility were issued by The Royal Bank of Scotland.
As part of the Placing (discussed further in note 7) GBP4.0
million of the term loan was repaid to The Royal Bank of Scotland,
pursuant to the banking agreement. A further GBP1.5 million was
repaid on 15 October 2012 in accordance with the original repayment
terms. No penalties were incurred on the GBP4.0 million early
repayment.
As at 31 December 2012, GBP0.5 million of the term loan and
GBP6.0 million of the revolving capital facility were outstanding.
GBP0.5million of the term loan is due for repayment in October 2013
and as such has been classified as a short-term liability. Interest
is charged on the outstanding loans at a rate of 2.75% over the
London Interbank Offered Rate.
Also, as part of the Placing (discussed in note 7) Mike Danson
converted GBP8.0 million of his GBP9.8 million interest free loan
into equity. The remaining GBP1.8 million was used to settle an
amount owed by World Market Intelligence, a company wholly owned by
Mike Danson.
Non-current borrowings can be reconciled as follows:
31 December 31 December
2012 2011
GBP000s GBP000s
RCF issued by The Royal Bank
of Scotland 6,000 6,000
Term loan issued by The Royal
Bank of Scotland - 4,500
Interest-free loan from Mike
Danson - 9,769
Capitalised fees, net of amortised
amount (233) (333)
------------------------------------ ------------ ------------
5,767 19,936
------------------------------------ ------------ ------------
7. Equity
Share capital
Authorised share capital:
31 December 31 December
2012 2011
GBP'000 GBP'000
1,000,000,000 Ordinary shares of GBP0.0001
each 100 100
100,000 Deferred shares of GBP1.00 each 100 100
------------------------------------------- ----------- -----------
200 200
------------------------------------------- ----------- -----------
Allotted, called up and fully paid:
2012 2011
No'000 GBP'000 No'000 GBP'000
Ordinary shares at 1 January
( GBP0.0001) 376,492 107 376,492 107
Issued in the year 155,556 15 - -
Transfer to share premium - (69) - -
----------------------------- ---------- --------- ----------- ----------
Ordinary shares c/f 31
December 532,048 53 376,492 107
Deferred shares of GBP1.00
each 100 100 100 100
----------------------------- ---------- --------- ----------- ----------
532,148 153 376,592 207
----------------------------- ---------- --------- ----------- ----------
Capital management
The Group's capital management objectives are:
-- to ensure the Group's ability to continue as a going concern
-- to fund future growth and provide an adequate return to
shareholders and, when appropriate distribute dividends
The GBP20 million share placement (completed on 30 April 2012)
coupled with the proposed share consolidation and re-capitalisation
will allow the Group to re-engineer its balance sheet to one more
fitting with its needs. In doing so, the Group will have a balance
sheet which will support further acquisitions and a capital
structure which will, when appropriate, allow the Group to
distribute dividends to our diverse investor base. Further details
will be set out in a circular to be published in April.
As mentioned above, during the year 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 GBP28.0 million.
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 Mike Danson,
entered into a capitalisation agreement to convert GBP8.0 million
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, Mike Danson's
shareholding in the Group is 67.72% (31 December 2011: 83.89%).
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
8. 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:
Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Discontinued operations
Revenue (566) 3,931
Cost of sales (675) (2,819)
--------------------------------------------- ------------- -------------
Gross (loss)/ profit (1,241) 1,112
Administrative costs (737) (1,058)
Other expenses (125) (9,410)
--------------------------------------------- ------------- -------------
Operating loss from discontinued operations (2,103) (9,356)
Finance costs (6) (14)
--------------------------------------------- ------------- -------------
Loss before tax from discontinued
operations (2,109) (9,370)
Income tax (charge)/credit 295 19
--------------------------------------------- ------------- -------------
Loss for the period from discontinued
operations (1,814) (9,351)
--------------------------------------------- ------------- -------------
b). Loss before tax
Year ended Year ended
31 December 31 December
2012 2011
This is arrived after charging: GBP000s GBP000s
Depreciation 14 12
Amortisation of intangible assets - 8
Amortisation of acquired intangibles 25 50
Impairment of intangible asset 100 9,360
-------------------------------------- ------------- -------------
c). Cash flows from discontinued operations
Year ended Year ended
31 December 31 December
2012 2011
GBP000s GBP000s
Cash flows from operating activities (1,306) 348
Cash (outflows)/ inflows from discontinued
operations (1,306) 348
9. Acquisitions
Kable
On 2 July 2012 the Group acquired the business and assets of
Kable for cash consideration of GBP2,300,000. Kable is 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. Kable is a good strategic fit business. It is
a subscription based business information company providing
Business Intelligence on technology expenditure. Furthermore,
Kable's product set can be extended to additional geographies,
developed for adjacent verticals and has, since acquisition, been
able to leverage our operational infrastructure to increase both
revenues and margin.
The Group incurred legal costs of GBP17,000 in relation to the
acquisition, which were recognised in other expenses (note 4).
The amounts recognised for each class of assets and liabilities
at the acquisition date were as follows:
Carrying Fair Value
Value Adjustments Fair Value
GBP000s GBP000s
Intangible assets consisting of:
Software - 135 135
Customer relationships - 705 705
Net liabilities acquired (762) - (762)
Net liabilities acquired (762) 840 78
----------------------------------- --------- ------------- -------------
Cash consideration 2,300
Less net assets acquired (78)
----------------------------------- --------- ------------- -------------
Goodwill 2,222
----------------------------------- --------- ------------- -------------
Since acquisition on 2 July 2012, Kable has contributed revenues
of GBP907,233 and a loss of GBP414,163. If the acquisition had
occurred on 1 January 2012, the Group revenue for 2012 would have
been GBP54.6 million and the profit before tax for continuing
operations would have been GBP4.6 million.
The goodwill that arose on the combination can be attributed to
revenue and cost synergies expected to arise upon integration of
Kable into Progressive Digital Media Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUPAPUPWGQP
Globaldata (LSE:DATA)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Globaldata (LSE:DATA)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024
