Last checked at 22 Mar 2010 07:00
22 March 2010
Progressive Digital Media Group plc
Preliminary Results For The Year Ended 31 December 2009
Progressive Digital Media Group plc (the "business" or the "Group") is an asset based, digital media business providing specialised, integrated digital solutions to a range of business and professional communities. It was formed from the businesses of Progressive Digital Media Limited ("PDM"), the acquisition, via reverse takeover, of TMN Group plc ("TMN") in June 2009 and the previous acquisition of SPG Media Group plc. Under the appropriate accounting standards PDM is treated as the acquiring entity following the reverse takeover of TMN and accordingly the Preliminary Results for the twelve months ended 31 December 2009 include twelve months results for PDM and six months for TMN.
Since the Group was formed, the key objective of the business has been to bring together and integrate the businesses and back office processes.
Key achievements in the year
| ·; | Significant improvement in key metrics of the business including EBITDA |
| ·; | The integration of the businesses of PDM and TMN has been completed ahead of plan |
| ·; | The business is now well placed to deliver revenue and cost synergies |
| ·; | Ongoing investment in our sales headcount, content and delivery platforms and introduction of common sales, product and back office processes which should in due course result in greater sales effectiveness and execution capability |
Financial performance
| ·; | Group revenues £37.1m (2008: £13.6m) |
| ·; | Adjusted EBITDA (1) £1.3m (2008: loss £1.6m) |
| ·; | EBITDA £0.6m (2008: loss £3.3m) |
| ·; | Loss before tax £3.0m (2008: loss £4.9m) |
| ·; | Because of the accounting requirements, the comparative results only include PDM which have never previously been released |
Our business
| ·; | Is focused on high growth digital media sectors such as Energy, Technology and Infrastructure |
| ·; | Is focused on providing high-value must have digital content |
| ·; | Is global in coverage and delivery |
| ·; | Is in the investment phase of its growth strategy |
| ·; | Has clear growth opportunities and an experienced management team |
Simon Pyper, CEO of Progressive Digital Media Group plc, commented:
"This has been a year of investment and integration and whilst much has been achieved there remains much to do if the Group is to realise its full potential. The Board is pleased with the progress made to date and remains confident of the long-term profitable prospects of the Group."
Note 1: Earnings Before Interest, Tax, Depreciation and Amortisation, adjusted for costs associated with the integration and restructure of the Group.
Enquiries:
| Progressive Digital Media Group plc | 0207 936 6400 |
| Mike Danson, Chairman |
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| Simon Pyper, CEO |
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| Investec Investment Banking, NOMAD and Broker | 0207 597 4000 |
| Erik Anderson / David Flin |
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| Hudson Sandler | 0207 796 4133 |
| Nick Lyon / James White |
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CHAIRMAN'S STATEMENT
In less than a year we have brought together three separate and unique businesses to create one of the United Kingdom's most dynamic digital media companies, Progressive Digital Media Group plc.
There has been much to do and in late July 2009 the Board of Progressive set the Executive Management team the following key objectives:
| 1. | To integrate the various businesses which came together to form Progressive Digital Media Group plc. |
| 2. | To reduce costs and drive efficiencies. |
| 3. | To invest in product and sales delivery platforms. |
I am pleased to say that against these objectives we have made good progress. As at December 2009 we have:
| ·; | relocated the majority of our operations to our new headquarters in Blackfriars; |
| ·; | implemented a common finance and reporting system; |
| ·; | implemented a common customer relationship management system (Salesforce.com); and, |
| ·; | reduced costs and improved efficiencies by integrating the Group's various operational activities (Finance, HR, I.T., Marketing etc). |
Looking ahead, and whilst there are further challenges, our focus will remain on integrating our existing service offering, leveraging our content and developing new information rich content which can be sold across multiple sale channels and platforms.
Strategy
Our strategy is simple; "to profitably grow revenues". Accordingly, our focus is on delivering innovative, content rich digital solutions across a number of high-value verticals and serving the needs of a growing and diversified customer base.
Board Changes
Ken Appiah, Group Finance Director, has informed the Board of his intention not to seek re-appointment at the forthcoming AGM. The Board would like to thank Ken for his significant contribution and wishes him every success for the future. We will make an announcement about Ken's replacement in due course.
Current Trading and Outlook
We have started the year well with revenue growth ahead of both our budget and prior year comparatives. Whilst the economic climate remains uncertain, we are confident that we are well placed not only to benefit from any cyclical upturn but also from the investment we have made in our people, our products and our delivery platforms.
2009 was a year of consolidation, integration and investment. 2010 will be a further year of transition and change, and then the Group will be well placed to make significant progress.
Mike Danson
Chairman
March 2010
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
We are pleased to announce our results for the twelve months to 31 December 2009, which are the second set of published results for the new enlarged Group. The Group was formed in June 2009 via a reverse takeover of TMN Group plc ("TMN") by Progressive Digital Media Limited ("PDM"). Accordingly these results include only 6 months of TMN's financial performance.
As mentioned at the time of our interim results we have a simple yet clear strategy "to profitably grow revenues" and some clear and achievable core aims.
Our core aims are to:
1. Increase traffic to our digital products
2. Increase yields and repeat business
3. To leverage new and existing products across multiple platforms
4. To leverage new and existing products into new high growth markets
We will report on how well we are doing against these, our core aims, during our normal financial reporting cycle for 2010.
This has been a year of investment and integration for the business. Since formation, our focus has been on; the integration of the various businesses that form the new enlarged Group, on reducing costs and driving efficiencies and investing in our product and sales delivery platforms. We have made good progress against all of these objectives and whilst much has been achieved there remains much to do if the Group is to realise its full potential.
Group Performance:
As the Group was formed via the reverse takeover of TMN by PDM, accounting standards deem PDM to be the acquiring company. Consequently the Preliminary Results for 2009 include twelve months results for PDM and six months results for TMN. Furthermore, the 2008 comparatives exclude the results for TMN and include only two months results for SPG Media Group plc (which was acquired November 2008).
The Group, on an adjusted basis, is profitable delivering an adjusted EBITDA for 2009 of £1.3m (2008: loss of £1.6m). Loss before tax was £3.0m (2008: loss £4.9m), which includes redundancy costs of £0.6m (2008: £0.1m) and property related provisions of £0.1m (2008: £1.6m).
The results for 2009 do not reflect the synergy benefits that we expect to accrue as a result of the integration and restructuring of the various businesses. Our expectation is that our results will reflect these synergy benefits from late 2010 onwards.
Despite the reported loss for the period the underlying business is profitable with good opportunities for long-term profitable growth.
Divisional performance:
Progressive
Progressive was created to acquire, invest and manage assets that operate in markets, which demonstrate significant growth potential. Since formation in August 2007, Progressive has purchased media assets from both Wilmington plc and Datamonitor plc and in November of 2008 acquired SPG Media Group plc. Progressive is predominately focused on the B2B space, providing content rich solutions in web-portals and subscription based information products.
Progressive employs almost 200 sales people (as at December 2009) and during 2009 recorded 23.4m website visits, 79.9m page impressions and hosted 54 conferences.
Revenues for the period are £31.0 million (2008: £13.6 million, which only included 2 months of SPG Media Group).
TMN
TMN is one of the United Kingdom's leading online digital marketing organisations, operating through a number of key channels: affiliate marketing, email marketing and online research.
TMN employs 53 sales people (as at December 2009) and during 2009 recorded 5.4m website visits, 21.5m website impressions, delivered 523.3m emails and completed 532 research projects.
Revenues for the six month period since acquisition are £6.0m (2008: Nil, as TMN Group was not acquired until June 2009 and therefore is not included in the 2008 results of PDM).
Financial Review
Adjusted Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA), adjusted for the costs associated with the integration and restructure of the Group, improved to £1.3m for the year (2008: loss of £1.6m). Reported EBITDA increased to £0.6 million for 2009 from a loss of £3.3m for 2008. The results for 2008 include £1.6 million of property provisions relating to the rationalisation of the Group's estate.
Capital Expenditure
The majority of capital expenditure for the year related to the purchase of office fittings and equipment for the Group's new head office building in Blackfriars. The Group is relatively 'capital light' as website and product costs are expensed to the income statement.
Change in Revenue Recognition
TMN previously reported certain revenue sharing agreements as if acting as principal, showing the gross revenue and cost of sale. Progressive's accounting policy on such transactions is to present them as acting as an agent (in line with normal industry reporting), netting the cost of sale against revenue. The substance of these transactions remains unchanged; however, TMN's recorded revenue for the six month period to 31 December 2009 is £7.8 million lower than would have previously been reported.
Financing
As at 31 December 2009 the Group had net debt of £14.8m. The principle source of financing for working capital requirements is an overdraft facility of £7.0m of which £5.9m was utilised at 31 December 2009. Borrowings of £9.8m consist of a subordinated interest free loan provided by Michael Danson.
Outlook and Prospects
We are confident that the investments we are making in our product, in our delivery and sales platforms, coupled with our focus on delivering both synergies and cost efficiencies mean that we are well placed to deliver upon our strategy, to profitably grow revenues.
Simon Pyper
Chief Executive
March 2010
Forward-looking statements
This document contains forward-looking statements which are made by the directors in good faith based on information available to them at the time of approval of this report. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated costs savings and synergies and the execution of Progressive Digital Media Group's strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside of Progressive Digital Media Group's control. Any forward-looking statements speak only as of the date they are made, and Progressive Digital Media Group gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based.
Condensed consolidated income statement
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| RESTATED |
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| Notes | 2009 | 2008 |
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| £000s | £000s |
| Continuing operations |
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| Revenue | 2 | 37,084 | 13,639 |
| Cost of sales |
| (19,687) | (8,216) |
| Gross profit |
| 17,397 | 5,423 |
| Distribution costs |
| (1,023) | (898) |
| Administrative costs |
| (15,713) | (6,985) |
| Other expenses | 3 | (3,287) | (2,509) |
| Operating loss |
| (2,626) | (4,969) |
| Finance income |
| - | 84 |
| Finance costs |
| (331) | - |
| Loss before tax |
| (2,957) | (4,885) |
| Income tax credit |
| 865 | 483 |
| Loss for the year from continuing operations |
| (2,092) | (4,402) |
| Profit for the year from discontinued operation | 10 | 4,678 | 439 |
| Profit/(loss) for the period |
| 2,586 | (3,963) |
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| Attributable to: |
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| Equity holders of the parent |
| 2,544 | (3,990) |
| Minority interest |
| 42 | 27 |
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| Basic earnings/(loss) per share attributable to equity holders: |
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| Continuing operations (pence) |
| (0.64) | (1.52) |
| Discontinued operation (pence) |
| 1.41 | 0.15 |
| Basic earnings/(loss) per share (pence) |
| 0.77 | (1.37) |
| Weighted average number of ordinary shares outstanding (in thousands) |
| 332,127 | 291,943 |
The accompanying notes form an integral part of this financial report.
The 2008 comparatives are noted as restated as they relate to Progressive Digital Media Limited. See note 1 for further details.
Condensed consolidated statement of comprehensive income
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| RESTATED |
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| 2009 | 2008 |
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| £000s | £000s |
| Profit/(loss) for the period |
| 2,586 | (3,963) |
| Other comprehensive income/(loss) |
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| Available-for-sale financial assets |
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| Current year gains/(losses) |
| 217 | (615) |
| Reclassified to the income statement |
| 398 | - |
| Actuarial gains/(losses) on defined benefit pension plans |
| 66 | (428) |
| Income tax relating to components of other comprehensive income |
| 154 | 292 |
| Other comprehensive income/(loss), net of tax |
| 835 | (751) |
| Total comprehensive income/(loss) for the period |
| 3,421 | (4,714) |
| Attributable to: |
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| Equity holders of the parent |
| 3,379 | (4,741) |
| Minority interest |
| 42 | 27 |
The accompanying notes form an integral part of this financial report.
The 2008 comparatives are noted as restated as they relate to Progressive Digital Media Limited. See note 1 for further details Condensed consolidated statement of financial position
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| RESTATED |
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| Notes | 2009 | 2008 |
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| £000s | £000s |
| Non-current assets |
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| Property, plant and equipment |
| 1,199 | 2,653 |
| Intangible assets | 5 | 27,279 | 22,478 |
| Deferred tax assets |
| 1,851 | 1,823 |
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| 30,329 | 26,954 |
| Current assets |
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| Inventories |
| 12 | 499 |
| Current tax receivable |
| 499 | - |
| Trade and other receivables |
| 15,938 | 7,358 |
| Available-for-sale financial assets |
| - | 3,128 |
| Cash and cash equivalents |
| 863 | 1,832 |
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| 17,312 | 12,817 |
| Total assets |
| 47,641 | 39,771 |
| Current liabilities |
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| Trade and other payables |
| (24,308) | (14,507) |
| Short-term borrowings | 6 | (5,886) | - |
| Current tax payable |
| (50) | (181) |
| Short-term provisions | 7 | (2,610) | (1,730) |
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| (32,854) | (16,418) |
| Non-current liabilities |
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| Long-term provisions | 7 | (1,932) | (2,317) |
| Deferred tax liabilities |
| (939) | (1,162) |
| Long-term borrowings | 6 | (9,769) | (24,305) |
| Retirement benefit liabilities |
| - | (226) |
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| (12,640) | (28,010) |
| Total liabilities |
| (45,494) | (44,428) |
| Net assets/(liabilities) |
| 2,147 | (4,657) |
| Equity |
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| Share capital |
| 137 | - |
| Share premium account |
| 11,819 | - |
| Other reserves |
| (8,197) | - |
| Revaluation reserve |
| - | (443) |
| Retained loss |
| (1,666) | (4,258) |
| Equity attributable to equity holders of the parent |
| 2,093 | (4,701) |
| Minority interest |
| 54 | 44 |
| Total equity |
| 2,147 | (4,657) |
The accompanying notes form an integral part of this financial report.
The 2008 comparatives are noted as restated as they relate to Progressive Digital Media Limited. See note 1 for further details Condensed consolidated statement of changes in equity
| RESTATED | Share capital | Share premium account | Merger reserve | Revaluation reserve | Retained earnings | Total | Minority interest | Total equity |
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| £000s | £000s | £000s | £000s | £000s | £000s | £000s | £000s |
| Balance at 1 January 2008 | - | - | - | - | 40 | 40 | 49 | 89 |
| Profit/(loss) for the period | - | - | - | - | (3,990) | (3,990) | 27 | (3,963) |
| Other comprehensive income: |
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| Actuarial loss on defined benefit pension scheme | - | - | - | - | (428) | (428) | - | (428) |
| Revaluation of available for sale assets | - | - | - | (615) | - | (615) | - | (615) |
| Deferred tax | - | - | - | 172 | 120 | 292 | - | 292 |
| Total comprehensive income | - | - | - | (443) | (4,298) | (4,741) | 27 | (4,714) |
| Dividends | - | - | - | - | - | - | (32) | (32) |
| Balance at 31 December 2008 | - | - | - | (443) | (4,258) | (4,701) | 44 | (4,657) |
| Profit for the period | - | - | - | - | 2,544 | 2,544 | 42 | 2,586 |
| Other comprehensive income: |
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| Actuarial gain on defined benefit pension scheme | - | - | - | - | 66 | 66 | - | 66 |
| Revaluation of available for sale assets | - | - | - | 217 | - | 217 | - | 217 |
| Reclassification to income statement | - | - | - | 398 | - | 398 | - | 398 |
| Deferred tax | - | - | - | (172) | (18) | (190) | - | (190) |
| Total comprehensive income | - | - | - | 443 | 2,592 | 3,035 | 42 | 3,077 |
| Dividends | - | - | - | - | - | - | (32) | (32) |
| Reverse acquisition | 137 | 11,843 | (8,197) | - | - | 3,783 | - | 3,783 |
| Revaluation of treasury shares | - | (24) | - | - | - | (24) | - | (24) |
| Balance at 31 December 2009 | 137 | 11,819 | (8,197) | - | (1,666) | 2,093 | 54 | 2,147 |
The accompanying notes form an integral part of this financial report.
The 2008 comparatives are noted as restated as they relate to Progressive Digital Media Limited. See note 1 for further details Condensed consolidated cash flow statement
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| RESTATED |
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| 2009 | 2008 |
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| £000s | £000s |
| Cash flows from operating activities |
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| Profit/(loss) after taxation | 2,586 | (3,963) |
| Adjustments for: |
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| Depreciation | 461 | 560 |
| Amortisation | 2,953 | 1,551 |
| Other income | - | (84) |
| Finance expense | 311 | - |
| Taxation expense recognised in profit or loss | (860) | (220) |
| (Increase)/decrease in trade and other receivables | (1,268) | 789 |
| Decrease in inventories | 234 | 46 |
| Increase in trade payables | 292 | 1,534 |
| Gain on disposal | (4,684) | - |
| Provisions and other non-cash items | (550) | 1,519 |
| Cash generated from operations | (525) | 1,732 |
| Dividends paid | - | (32) |
| Interest (paid)/received | (311) | 84 |
| Income taxes paid | (17) | (69) |
| Net cash from operating activities | (853) | 1,715 |
| Cash flows from investing activities |
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| Acquisition of SPG, net of cash acquired | - | (7,051) |
| Acquisition of TMN, net of cash acquired | (2,287) | - |
| Sale of discontinued operation | 10,794 | - |
| Purchase of property, plant and equipment | (781) | (435) |
| Sale of property, plant and equipment | - | 190 |
| Purchase of intangible assets | (434) | (1,434) |
| Purchase of available for sale financial assets | - | (3,742) |
| Net cash from investing activities | 7,292 | (12,472) |
| Cash flows from financing activities |
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| Repayment of short-term borrowings | (2,500) | - |
| Proceeds from long-term borrowings | - | 11,605 |
| Repayments of long-term borrowings | (10,794) | - |
| Net cash from financing activities | (13,294) | 11,605 |
| Net (decrease)/increase in cash and cash equivalents | (6,855) | 848 |
| Cash and cash equivalents at beginning of period | 1,832 | 984 |
| Cash and cash equivalents at end of period | (5,023) | 1,832 |
Balance sheet reconciliation:
| Cash and cash equivalents | 863 | 1,832 |
| Overdraft (short-term borrowings) | (5,886) | - |
| Cash and cash equivalents at end of period | (5,023) | 1,832 |
The accompanying notes form an integral part of this financial report.
The 2008 comparatives are noted as restated as they relate to Progressive Digital Media Limited. See note 1 for further details Notes to the condensed consolidated financial statements
1. General information
Basis of preparation
The 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.
Progressive Digital Media Group plc ('the Company' and together with its subsidiaries 'the Group') issued new shares in June 2009 to Michael Danson to acquire the share capital of Progressive Digital Media Limited (see note 8). After the acquisition Michael Danson owned the majority of the Company. Under IFRS the transaction is deemed to be a reverse acquisition. The assets and liabilities of Progressive Digital Media Limited have been recognised and measured at their pre-combination carrying values and the comparative results are those of Progressive Digital Media Limited and therefore the retained earnings and other reserves brought forward are those of Progressive Digital Media Limited. The cost of the acquisition was measured at the pre-acquisition value of the ordinary shares of the legal parent before the acquisition. The assets and liabilities of TMN Group plc have been recognised at the fair value at the acquisition date. The premium arising on the acquisition has been allocated firstly to those intangible assets identified on acquisition that are controlled by the Company and are capable of being measured reliably, and any remaining premium that cannot be allocated to separately identified intangible assets has been allocated to goodwill. The share capital and share premium at the period end are those of the Company. The movement in the share capital and share premium from Progressive Digital Media Limited to Progressive Digital Media Group plc is recognised as Other Reserve.
These condensed financial statements are for the year ended 31 December 2009 and should be read in conjunction with the readmission document that was sent to all shareholders and is available on the Company's website. These condensed financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.
This preliminary announcement does not constitute the Group's full financial statements for the year ended 31 December 2009. The auditors have reported on the Group's statutory accounts for the year ended 31 December 2009 under s495 of the Companies Act 2006, which does not contain statements under s498(2) or s498(3) of the Companies Act 2006 and is unqualified. The statutory accounts for the year ended 31 December 2009 will be filed with the Registrar in due course.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In the future, actual experience may deviate from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to property provisions, valuation of acquired intangible assets, provisions for bad debt and other credit balances in the statement of financial position.
Seasonal fluctuations
SPG Media Group's business is subject to seasonal fluctuations as revenue is recognised upon publication or event occurring. The Group's results for 2008 included two months of SPG Media Group in which it generated a loss.
Going concern
The Group meets its day-to-day working capital requirements from an overdraft facility of £7.0 million of which £5.9 million was utilised as at 31 December 2009. Subsequent to the period end trading has lowered cash reserves, however, as noted above the Group's business is highly seasonal and based on cash flow projections the Group considers the existing financing facilities to be adequate to meet short-term commitments. There are no covenants associated with the overdraft and no restrictions on the long-term borrowing. Borrowings of £9.8 million consist of a subordinated interest free loan provided by Michael Danson, which is repayable by 2019 and is not expected to be repaid in the next twelve months. In addition to the existing facility Mr Danson provided the Group with a £2.0 million working capital loan at the time of the reverse acquisition. This loan has not yet been drawn upon.
The Group's overdraft facility is due for renewal in November 2010. The Group has prepared the accounts on a going concern basis on the assumption that this facility is renewed, or that in the event of the overdraft facility not being renewed that the Group can obtain suitable short-term financing.
2. Segmental analysis
The Group operates in two divisions; Progressive and TMN. Progressive consists of the original businesses acquired by Progressive Digital Media Limited, and SPG Media Group plc that was integrated into Progressive after acquisition. TMN consists of the legacy business of TMN Group plc.
As noted in the basis of preparation Progressive Digital Media Limited is deemed to be the acquiring company under the application of reverse acquisition rules. Therefore the comparative results to the date of acquisition consist solely of Progressive. The results for the year ended 31 December 2009 include TMN from the date of acquisition, 25 June 2009. There is no difference between segmental revenue and Group revenue for the comparative period.
Segment operating profit or loss is reported to the Board on a monthly basis and consists of earnings before interest, tax, depreciation and amortisation.
| Year to 31 December 2009 | Progressive | TMN | Total | |||
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| £000s | £000s | £000s | |||
| Segment revenues | 31,047 | 6,037 | 37,084 | |||
| Segment operating profit | 433 | 173 | 606 | |||
| Year to 31 December 2008 | Progressive | TMN | Total | |||
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| £000s | £000s | £000s | |||
| Segment revenues | 13,639 | - | 13,639 | |||
| Segment operating loss | (3,287) | - | (3,287) | |||
Reconciliation of segment operating profit/(loss) to loss before tax
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| 31 December 2009 | 31 December 2008 |
|
| £000s | £000s |
| Segment operating profit/(loss) | 606 | (3,287) |
| Depreciation | (437) | (510) |
| Amortisation | (2,795) | (1,172) |
| Finance income | - | 84 |
| Finance costs | (331) | - |
| Loss before tax | (2,957) | (4,885) |
The segmental results for discontinued operations are in note 10 and consist of a single segment that was sold in June 2009.
Geographical analysis
| Year to 31 December 2009 | UK | Europe | Rest of World | Total |
|
| £000s | £000s | £000s | £000s |
| Revenue from external customers | 18,136 | 11,973 | 6,975 | 37,084 |
| Year to 31 December 2008 | UK | Europe | Rest of World | Total |
|
| £000s | £000s | £000s | £000s |
| Revenue from external customers | 12,184 | 920 | 535 | 13,639 |
3. Other expenses
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| 2009 | 2008 |
|
| £000s | £000s |
| Redundancy | 634 | 72 |
| Property related provisions | 76 | 1,589 |
| Restructuring and reorganisation costs | 20 | - |
| Amortisation of acquired intangibles | 2,557 | 848 |
|
| 3,287 | 2,509 |
4. Earnings per share
The calculation of the basic earnings per share is normally based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. As a result of the reverse acquisition the weighted average number of shares up until the reverse acquisition is deemed to be the number of shares that were issued by the Company to effect the reverse acquisition.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
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| 2009 | 2008 |
| Continuing operations |
|
|
| Loss attributable to ordinary shareholders (£000s) | (2,134) | (4,429) |
| Weighted average number of shares (000s) | 332,127 | 291,943 |
| Basic loss per share (pence per share) | (0.64) | (1.52) |
| Discontinued operation |
|
|
| Profit attributable to ordinary shareholders (£000s) | 4,678 | 439 |
| Weighted average number of shares (000s) | 332,127 | 291,943 |
| Basic earnings per share (pence per share) | 1.41 | 0.15 |
| Total operations |
|
|
| Profit/(loss) attributable to ordinary shareholders (£000s) | 2,544 | (3,990) |
| Weighted average number of shares (000s) | 332,127 | 291,943 |
| Basic earnings/(loss) per share (pence per share) | 0.77 | (1.37) |
5. Intangible assets
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| Software | Customer relationships | IP rights | Goodwill | Total intangibles |
|
| £000s | £000s | £000s | £000s | £000s |
| Net book value |
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|
|
| As at 1 January 2008 | 398 | 852 | 5,040 | 3,370 | 9,660 |
| Additions | 93 | - | 1,341 | - | 1,434 |
| Acquisition of SPG | 101 | 3,812 | 2,327 | 6,721 | 12,961 |
| Amortisation | (324) | (541) | (686) | - | (1,551) |
| Disposals | (26) | - | - | - | (26) |
| As at 31 December 2008 | 242 | 4,123 | 8,022 | 10,091 | 22,478 |
| Additions | 434 | - | - | - | 434 |
| Acquisition of TMN | 250 | 3,588 | - | 7,016 | 10,854 |
| Amortisation | (238) | (1,877) | (838) | - | (2,953) |
| Disposals | (168) | (165) | (1,954) | (1,247) | (3,534) |
| As at 31 December 2009 | 520 | 5,669 | 5,230 | 15,860 | 27,279 |
6. Borrowings
|
| 2009 | 2008 |
|
| £000s | £000s |
| Current |
|
|
| Bank overdraft | 5,886 | - |
|
|
|
|
| Non-current |
|
|
| Long-term loans | 9,769 | 24,305 |
Non-current borrowings of £9.8 million consist of a loan provided by Michael Danson.
7. Provisions
The movement in the provisions is as follows:
|
| Onerous leases |
Dilapidations | Reward points |
Other |
Total |
|
| £000s | £000s | £000s | £000s | £000s |
| At 1 January 2008 | - | - | - | - | - |
| Increase in provision | 1,465 | 124 | - | - | 1,589 |
| Acquisition of SPG | 1,869 | 659 | - | - | 2,528 |
| Utilised | (70) | - | - | - | (70) |
| At 31 December 2008 | 3,264 | 783 | - | - | 4,047 |
| Increase in provision | - | 114 | 431 | 66 | 611 |
| Utilised | (678) | (174) | (220) | (51) | (1,123) |
| Release of unutilised provision | - | (38) | - | - | (38) |
| Acquisition of TMN | 616 | 228 | 149 | 52 | 1,045 |
| At 31 December 2009 | 3,202 | 913 | 360 | 67 | 4,542 |
| Current | 1,589 | 594 | 360 | 67 | 2,610 |
| Non-current | 1,613 | 319 | - | - | 1,932 |
8. Acquisitions
Business Review
In July 2008 the Company acquired the assets and liabilities of the Business Review business from Datamonitor plc for £700,000. Business Review was integrated into Progressive Media after acquisition.
SPG Media Group
On 5 November 2008, Progressive acquired 100% of the issued share capital of SPG Media Group plc, a company based in the UK. The purchase price was settled in cash. The amounts recognised for each class of assets, liabilities and contingent liabilities recognised at the acquisition date were as follows:
|
| Carrying value | Fair value adjustments | Fair value |
|
| £000s | £000s | £000s |
|
|
|
|
|
| Property, plant and equipment | 383 | - | 383 |
| Intangible assets | 4,749 | 1,594 | 6,343 |
| Deferred tax assets | - | 434 | 434 |
| Trade and other receivables | 3,747 | - | 3,747 |
| Cash and cash equivalents | 3,440 | - | 3,440 |
| Total assets | 12,319 | 2,028 | 14,347 |
|
|
|
|
|
| Trade and other payables | (8,049) | - | (8,049) |
| Long-term provisions | (2,528) | - | (2,528) |
| Total liabilities | (10,577) | - | (10,577) |
| Net assets | 1,742 | 2,028 | 3,770 |
| Purchase consideration |
|
| 9,989 |
| Costs |
|
| 502 |
|
|
|
| 10,491 |
| Less fair value of net assets acquired |
|
| (3,770) |
| Goodwill |
|
| 6,721 |
The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon integration of SPG Media Group into Progressive and the acquisition of a management team and sales force.
TMN Group
On 25 June 2009, Progressive completed a reverse acquisition of TMN Group plc, a company based in the UK. The reverse acquisition was achieved through the issue of new shares to Michael Danson. The amounts recognised for each class of assets, liabilities and contingent liabilities recognised at the acquisition date were as follows:
|
| Carrying value | Fair value adjustments | Fair value |
|
| £000s | £000s | £000s |
|
|
|
|
|
| Property, plant and equipment | 464 | - | 464 |
| Intangible assets | - | 3,838 | 3,838 |
| Corporation tax | 489 | - | 489 |
| Trade and other receivables | 4,702 | (369) | 4,333 |
| Total assets | 5,655 | 3,469 | 9,124 |
|
|
|
|
|
| Overdraft | (1,352) | - | (1,352) |
| Short-term loan | (2,500) | - | (2,500) |
| Trade and other payables | (5,894) | (391) | (6,285) |
| Deferred tax liabilities | - | (240) | (240) |
| Long-term provisions | (1,045) | - | (1,045) |
| Total liabilities | (10,791) | (631) | (11,422) |
| Net liabilities | (5,136) | 2,838 | (2,298) |
| Purchase consideration |
|
| 3,783 |
| Costs |
|
| 935 |
|
|
|
| 4,718 |
| Add fair value of net liabilities acquired |
|
| 2,298 |
| Goodwill |
|
| 7,016 |
The purchase consideration is calculated with reference to the share price prior to the reverse acquisition. 77,605,014 shares were issued to effect the reverse acquisition, valued at 4.875p.
The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon integration of TMN Group into Progressive.
Since the acquisition TMN Group contributed a loss of £340,000 to the Group profit from the date of acquisition to 31 December 2009. Had the acquisition occurred on 1 January 2010 the revenue for the year to 31 December 2009 would have been £38,744,000 and the profit for the year would have been £2,352,000.
9. Related party transactions
Michael Danson, Progressive Digital Media Group's Chairman, owns 85.47% of the Company's ordinary shares as at 22 March 2010. Michael Danson owns a number of businesses that interact with Progressive Digital Media Group. The principal transactions are as follows:
Sales of assets prior to reverse acquisition
As described in note 10 certain assets of the legacy Progressive Media Group were excluded from the reverse acquisition and were sold to investment companies owned by Michael Danson. These included the construction and design titles, a property in Foots Cray and an investment in Huveaux plc. The property was sold for £2,671,000. The discontinued operation is detailed in note 10.
Accommodation
Following the sale of the freehold property, Progressive Digital Media Group entered into a 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 year to 31 December 2009 was £586,000, net of a recharge of £136,000 to the other companies occupying the buildings.
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 year to 31 December 2009 was £1,091,000.
Loans
Michael Danson has provided loans to the Group during the periods presented. The loans do not carry any interest.
10. Discontinued Operations
Prior to the reverse acquisition Progressive Digital Media disposed of Estel Investments and its construction and design titles to companies controlled by Michael Danson for £10,794,000. Estel Investments held the Group's investment in Huveaux plc and a loan that was provided by Michael Danson to fund the investment. The assets and liabilities associated with the construction and design titles were also disposed of. The trading results of the construction and design titles were reported separately to management and have been treated as a discontinued operation for all periods reported in the income statement.
|
| 2009 | 2008 |
|
| £000s | £000s |
| Discontinued operation |
|
|
| Revenue | 3,172 | 8,044 |
| Cost of sales | (2,015) | (4,338) |
| Gross profit | 1,157 | 3,706 |
| Distribution costs | (204) | (474) |
| Administrative costs | (816) | (2,150) |
| Other expenses | (158) | (379) |
| Operating profit/(loss) | (21) | 703 |
| Other income | 91 | 113 |
| Finance expense | (71) | (113) |
| Profit/(loss) before tax | (1) | 703 |
| Income tax expense | (5) | (264) |
| Profit/(loss) after tax | (6) | 439 |
| Gain on disposal | 4,684 | - |
| Profit for the period from discontinued operation | 4,678 | 439 |
|
|
|
|
| Earnings per share: |
|
|
| Basic earnings per share from discontinued operation | 1.41 | 0.15 |
Balance sheet as at 5 June 2009 (date of disposal)
|
| £000s |
|
|
|
| Property, plant and equipment | 150 |
| Intangible assets | 6,333 |
| Deferred tax assets | 69 |
| Investments | 3,252 |
| Inventories | 253 |
| Trade and other receivables | 4,555 |
| Cash and cash equivalents | 153 |
| Total assets | 14,765 |
|
|
|
| Trade and other payables | (4,283) |
| Long-term provisions | (553) |
| Long-term borrowings | (3,742) |
| Retirement benefit liabilities | (77) |
| Total liabilities | (8,655) |
| Net assets | 6,110 |
|
|
|
| Consideration received | 10,794 |
| Less net assets disposed of | (6,110) |
| Gain on sale of discontinued operation | 4,684 |
Advisers
Company Secretary
Kenneth Appiah
Head Office and Registered Office
John Carpenter House
John Carpenter Street
London
EC4Y 0AN
Tel: + 44 (0) 20 7936 6400
Nominated Adviser and Broker
Investec Bank plc
2 Gresham Street
London
EC2V 7QP
Solicitors
Foot Anstey
Salt Quay House
Sutton Harbour
Plymouth
PL4 0BN
Auditors
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
Lloyds TSB Bank plc
25 Gresham Street
London
EC2V 7HN
Registered number
Company No. 3925319