GlobalData Regulatory News (DATA)

6 March 2012

Progressive Digital Media Group Plc

Preliminary Results For The Year Ended 31 December 2011

'A year of significant progress'

The principal activity of Progressive Digital Media Group Plc (PDMG) and its subsidiaries ('the Group') is to provide its customers with high quality information and services through multiple channels. The unique and up to date knowledge and information we provide enables organisations to gain competitive advantage and market share.

Highlights

Key achievements in 2011

·; Delivery of revenue and earnings growth

·; Renewed our focus on the Consumer and Technology Business Information markets

·; Plans in place for International expansion in 2012

·; Infrastructure in place for future growth

Financial performance

·; Group revenue increased by 13.3% to £54.4m (2010: £48.0m)

·; Adjusted EBITDA(2) increased by 91.2% to £7.3m (2010: £3.8m)

·; Adjusted EBITDA Margin (2) increased to 13.5% (2010: 8.0%)

·; Reported EBITDA(1) increased by 143.5% to £5.7m (2010: £2.3m)

·; Reported loss before tax of £7.9m (2010: Loss £4.6m) inclusive of a non-cash impairment charge of £9.4m.

Our business

·; A strong and scalable asset base

·; Premium business information services covering the Consumer and Technology markets

·; Significant contracted and visible revenue streams including digital subscriptions

·; Globally exploitable business model

·; High gross margin product

Mark Meek, CEO of Progressive Digital Media Group plc, commented:

"These are a strong set of results delivered during a period of substantial change and investment. Moreover, this has been achieved in a period of relatively weak economic conditions.

We are beginning to benefit from the significant investments in business information content, staff and delivery platforms and to reap rewards from the efficiencies we have achieved through the introduction and integration of common processes and systems."

Note 1: EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a charge of £1.2 million for share based payment (2010: nil).

Note 2: Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions, integration and restructure of the Group. Adjusted EBITDA Margin is defined as; Adjusted EBITDA as a percentage of revenue.

Enquiries:

CHAIRMAN'S STATEMENT

Over the last three years we have implemented major change programmes as we brought together the various companies in the Group and refocused them on our key markets. We have also continued to invest in Business Intelligence content, staff and delivery platforms.

As part of this continuing strategy, we propose to rebrand the company under the unified name of Progressive Intelligence PLC. We feel this better reflects our objective to become a global leader in providing business information to our customer base across multiple channels.

We acquired Canadean, a leading provider of business and market intelligence to the global consumer products market, in September 2010. The business is now fully integrated within the Group and in line with our expectations, continued to perform well in 2011.

With the organisational changes that we have implemented and the significant investment made in content and staff, we believe the Group now has in place the correct structure and technical platforms to allow us to accelerate our growth in 2012 and beyond.

Our business model

We have a simple business model, which is designed to generate revenues off a relatively fixed operating cost base allowing for operational gearing to drive growth and margin. Its key features are:

1. A strong and scalable asset base

2. Premium business information services covering the Consumer and Technology markets

3. Significant contracted and visible revenue streams including digital subscriptions

4. Global exploitable business model

5. High gross margin product

Our strategy

Our strategy is to focus on:

1. Key, high growth global markets

2. Digital subscription based content, which can be leveraged across multiple platforms

3. Quality product and customer delivery

The strategy will be delivered by a combination of strong organic growth and selective acquisitions in our target markets.

Board changes

Mark Meek was appointed as CEO in August 2011. Mark joined the Group from Datamonitor plc and has over 20 years of senior management experience in the Business Information sector.

Simon Pyper remains on the Board as Chief Financial Officer.

Current trading and outlook

Current trading is in line with expectations and we expect to make further progress during the remainder of 2012. Whilst the economic climate remains unpredictable, we are confident that we are well placed to not only benefit from any cyclical upturn, but more importantly, also from the investment we have made in our people, our content and our delivery platforms.

We are committed to the long-term development of this company and are confident that the investments we have made, and plan to make, in our business model will allow the Group to deliver on its strategy.

Mike Danson

Chairman

6 March 2012

CHIEF EXECUTIVE OFFICER'S REVIEW

These are a strong set of results delivered during a period of substantial change and investment. Moreover, that this has been achieved in a period of relatively weak economic conditions is even more pleasing.

Our intention is to become a leading provider of premium business information focused on the global Consumer and Technology sectors. Moreover, we believe that by increasing our focus on premium business information and fact-based insight will make the organisation even more resilient and will deliver robust and consistent revenue and profit growth.

By proposing to rename the company Progressive Intelligence PLC we aim to be an instantly recognisable brand that becomes indispensible to companies in an environment where information is increasingly linked to competitive advantage. We provide this information via multiple channels: premium business information, face-to-face interactions, premium web-based content and where appropriate, printed materials.

We are beginning to benefit from the significant investments in Business Information content, staff and delivery platforms and to reap rewards from the efficiencies we have achieved through the introduction and integration of common processes and systems.

The Group is now focused on the business information market and we believe that this strategy will be a major accelerator of growth in 2012 and in future years.

Key achievements delivered in 2011:

·; Increased the Group's revenue by 13.3% year on year

·; Increased Adjusted EBITDA margins by 5.5% to 13.5%

·; Increased profitability at the Adjusted EBITDA level by 91.2%

·; Renewed our focus on the Consumer and Technology Business Information markets

·; Plans in place for International expansion in 2012

·; Infrastructure in place for future growth.

During 2012 our key objectives will be to:

·; Focus on high-quality, subscription based Business Information services and products

·; Maximise sales force effectiveness, following significant investment in our sales teams

·; Expand our geographic footprint in high-growth consumer markets, such as China, India, Japan, the Americas, Australasia, South Africa and the Middle East

·; Focus on long term margin improvement.

The largest opportunity for the Group is in Business Information, which is global in nature, less prone to both short term macro variations and longer term structural change and continues to grow. Moreover, with Canadean we have a strong and credible base from which to grow our offering.

We are confident that we are well placed to meet our key objectives and deliver long term profitable growth. We believe that we now have a scalable business model with a strong product proposition which is supported by committed and talented staff.

M Meek

Chief Executive Officer

6 March 2012

CHIEF FINANCIAL OFFICER'S FINANCIAL REVIEW

Financially, the Group has performed well and is profitable at the EBITDA (1) and Adjusted EBITDA (2) level. We have increased revenues to £54.4 million (2010: £48.0 million) and improved Adjusted EBITDA margins by 5.5% to 13.5%. Loss before tax was £7.9 million (2010: loss before tax £4.6 million), which includes:

·; £9.4 million non-cash impairment charge relating to the goodwill of B2C digital marketing;

·; £1.2 million of share option expense;

·; £0.2 million of M&A costs; and

·; £0.4 million of redundancy costs.

Note 1; EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment.

Note 2; Adjusted EBITDA: EBITDA adjusted for costs associated with derivatives, acquisitions, integration, share-based payment and restructure of the Group.

Despite the reported operating loss for the period, the underlying business is profitable with good opportunities for long-term profitable growth in terms of PBT and EBITDA as well as further growth in sales and improvement in margins.

Divisional performance:

Business Information is predominately focused on the B2B space, providing content-rich, web-based information products, via its print, web and events divisions. Business Information's results include for the first time a full year's contribution from Canadean, which was acquired in September 2010.

Revenues for the year are £48.2 million (2010: £39.5 million) generating a contribution of £17 million (2010: £13.1 million).

B2C digital marketing is focused on the B2C market, providing innovative, online digital marketing, research and panel solutions.

Performance for the year has been disappointing, with revenues of £6.2 million (2010: £8.5 million) and contribution of £1.4 million (2010: £2.3 million).

Impairment of goodwill

During the year, the Group has recognised a non-cash impairment charge in relation to the goodwill allocated to the B2C digital marketing business unit of £9.4 million. The goodwill was recognised on the Group's reverse acquisition of the TMN Group in 2009. Since acquisition, the TMN Group's performance has been below expectations.

The B2C digital marketing business unit has seen a significant fall in revenues over the past 12 months (a decline of 27% in that period). It is no longer seen as a future growth opportunity for the Group. We will continue to support the business unit; however, it is clear that significant investment is needed to stabilise the business, which we are not going to provide. At June 2011, it was felt that the business could be stabilised and turned around. In the second half of the year however, there was a material worsening in the results.

The appointment of Mark Meek as CEO has placed renewed focus on driving the Business Information business unit to become a global leader. Therefore, future investment will be focused in this area rather than in the B2C digital marketing business unit. Management has concluded that the carrying value of goodwill exceeded the future cash flow projections and as a result has decided that the goodwill allocated to B2C digital marketing is impaired.

Earnings per share

Basic loss per share from continuing operations was 2.09 pence per share (2010: loss of 0.98 pence per share).

Cash flow

The Group generated £5.7 million of EBITDA in 2011, which excludes £0.8 million paid in relation to onerous leases and other amounts paid in relation to costs that were provided for at the start of the year. Working capital movements reduced the cash generated from operations to an inflow of £3.1 million. A number of leases were assigned or terminated during 2010 and the cash impact is expected to reduce in future periods. No leases were assigned or terminated in the current year.

Capital expenditure was £1.1 million in 2011 (£2.5 million in 2010). This included £0.5 million on software.

Currency rate risk

The Group's primary objective in managing foreign currency risk is to protect against the risk that the eventual Sterling net cash flows will be affected by changes in foreign currency exchange rates. To do this, the Group enters into foreign exchange collars that limit both the risk and benefit from movements in US dollar and Euro exchange rates with Sterling. Whilst commercially this hedges the Group's currency exposures, it does not meet the requirements for hedge accounting and accordingly any movement in the fair value of the foreign exchange collars are recognised in the income statement.

Liquidity risk and going concern

The Group's approach to managing liquidity risk is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities as they fall due with surplus facilities to cope with any unexpected variances in timing of cash flows.

In October 2011, the Group refinanced its debt position. A £6 million term loan and a £6 million revolving capital facility were issued by the Royal Bank of Scotland. The new facilities replaced the £7 million overdraft facility and also repaid Mike Danson £6.5 million of the loan used to fund the acquisition of Canadean. The term loan is repayable over four years in equal instalments on the anniversary of the issue. The finance facilities were issued with debt covenants which are measured on a quarterly basis. The Company has operated within its covenants as assessed at 31 December 2011. Management have reviewed forecasted cash flows and there is no indication that there will be any breach in the next 12 months.

The Group meets its day-to-day working capital requirements from an overdraft facility of £3 million, of which £1.29 million was utilised as at 31 December 2011. Based on cash flow projections, the Group considers the existing financing facilities to be adequate to meet short-term commitments.

The Group has two loans from the Chairman and majority shareholder, Mr Danson. An interest free loan of £9.8 million is repayable by 2019. The company has received a written undertaking that Mr Danson would not demand repayment of this loan for a period of 12 months from the date of approval of the financial statements.

The £9.0 million loan to fund the acquisition of Canadean has £2 million outstanding as at 31 December 2011. Repayments on the loan will only be made to the extent that the Group has sufficient forecast working capital to meet all of its liabilities.

The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group's ability to continue as a going concern. Accordingly, the Group has prepared the annual report and financial statements on a going concern basis.

S Pyper

Chief Financial Officer

6 March 2012

Consolidated Income Statement

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

Consolidated Statement of Financial Position

 Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

1. General information

Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with the Listing Rules of the Financial Services Authority and in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union (EU). In respect of accounting standards applicable to the Group there is no difference between EU-adopted IFRS and International Accounting Standards Board (IASB)-adopted IFRS.

The financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. These condensed financial statements are for the year ended 31 December 2011 and should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2010 that was sent to all shareholders and is available on the Company's website. These financial statements are presented in Pounds Sterling (£), which is also the functional currency of the Company.

This preliminary announcement does not constitute the Group's full financial statements for the year ended 31 December 2011. The auditors have reported on the Group's statutory accounts for the year ended 31 December 2011 under s495 of the Companies Act 2006, which do not contain statements under s498(2) or s498(3) of the Companies Act 2006 and are unqualified. The statutory accounts for the year ended 31 December 2011 will be filed with the Registrar of companies in due course.

Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the future, actual experience may deviate from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to property provisions, valuation of acquired intangible assets, provisions for bad debt, share based payments and the carrying value of goodwill and other intangibles in the statement of financial position.

Property provisions

The onerous lease and dilapidations property provisions require an estimate to be made of the net present value of the future costs of vacant and sublet properties. The calculation includes estimates of future cost involved, including management's estimates of the long-term letting potential of the properties, future rental income, market rents, periods of vacancy and the level of incentives required to sub-let vacant properties.

Valuation of acquired intangibles

Management identified and valued acquired intangibles on acquisitions that were made during the periods disclosed in the financial statements. Management has applied judgements in identifying and valuing intangibles assets separate from goodwill that consist of assessing the value of brands, software and customer relationships.

Provision for bad debt

The Group is required to judge when there is sufficient objective evidence to require the impairment of individual trade receivables. It does this on the basis of the age of the relevant receivables, external evidence of the credit status of the debtor entity and the status of any disputed amounts.

Share based payments

The Group operates a share based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options and awards is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in assumptions about the number of options and awards that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement, with a corresponding adjustment to the share option reserve within equity.

Carrying value of goodwill and other intangibles

The carrying value of goodwill and other intangibles is assessed at least annually to ensure that there is no need for impairment. Performing this assessment requires management to estimate future cash flows to be generated by the related cash generating unit, which entails making judgements including the expected rate of growth of revenues, margins expected to be achieved, the level of future capital expenditure required to support these outcomes and the appropriate discount rate to apply when valuing future cash flows. Management consider that the most sensitive of these assumptions is the future maintainable earnings of the cash generated units. An impairment charge has been recognised in respect of the B2C digital marketing segment for the year ended 31 December 2011.

At 31 December 2011 the Group had £25.1 million of goodwill and other intangibles assets (2010: £36.9 million).

Going concern

The Group meets its day-to-day working capital requirements from an overdraft facility of £3.0 million of which £1.29 million was utilised as at 31 December 2011. Based on cash flow projections the Group considers the existing financing facilities to be adequate to meet short-term commitments.

The Group has two loans from the Chairman and majority shareholder, Mr Danson. The interest free loan of £9.8 million is repayable by 2019 and is not expected to be repaid in the next 12 months. The £9 million loan to fund the acquisition of Canadean has £2.0 million outstanding as at 31 December 2011. Repayments on the loan will only be made to the extent that the Group has sufficient forecast working capital to meet all of its liabilities. Given the size and nature of these loans, the Group is reliant on the financial support of the Chairman and majority shareholder.

The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group's ability to continue as a going concern. Accordingly, the Group has prepared the annual report and financial statements on a going concern basis.

2. Accounting policies

This report has been prepared based on the accounting policies detailed in the Group's financial statements for the year ended 31 December 2011.

3. Segmental analysis

Segmental results

The Group considers the business from a division (Business Information and B2C digital marketing) and a geographic perspective.

Segment profit or loss is reported to the Board (which is considered to be the Group's chief operating decision maker) on a monthly basis and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items.

Business Information

Business Information is predominately focused on the B2B space, providing content-rich, web-based information products, via its print, web and events divisions.

B2C digital marketing

B2C digital marketing is focused on the B2C market, providing innovative, online digital marketing, research and panel solutions.

Year to 31 December 2011

Year to 31 December 2010

Reconciliation of segment results to loss before tax

Geographical analysis

4. Other expenses

·; Redundancy costs relate to redundancies made during the year that were announced prior to 31 December 2011.

·; Property related provisions relate to the consolidated Income Statement impact in the provision made for onerous properties and dilapidations.

·; The revaluation of currency collar relates to movement in the fair value of the short and long term derivatives.

·; The impairment and amortisation relate to acquired intangible assets.

·; The share option expense relates to the share option plan.

5. Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

The Group has a share options scheme in place, the effect of which is anti-dilutive on the earnings per share calculation. Therefore, in accordance with IAS 33 no adjustment has been made to the diluted loss per share. The diluted loss per share is equal to basic loss per share.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

6. Borrowings

 The Royal Bank of Scotland Credit Facilities

Interest free loan repayable by 2019

A £9.8 million loan provided by Michael Danson. The loan note allows Michael Danson to require redemption at par on demand or for the company to redeem at par at any time. As such it was drafted as an on demand liability. As at 31 December 2011 the loan is classified as repayable after more than one year having received an undertaking from Michael Danson that he would not demand repayment for a period of 12 months from the balance sheet date. This undertaking was confirmed upon signing the financial statements to ensure that the directors could prepare the accounts on a going concern basis. The loan is repayable by 2019.

Loan to fund acquisition of Canadean

A £9 million loan was provided by Michael Danson to fund the acquisition of Canadean. The loan is repayable by 2013 and has an interest rate of 275 basis points over the 3-month London Interbank Offered Rate, in line with the rates that were available from third-party lenders at the time of the acquisition negotiations.

The outstanding amount brought forward as at 1 January 2011 was £8.5m. A further £6.5m was repaid in October 2011 following the agreement of new credit facilities with The Royal Bank of Scotland. The outstanding loan now stands at £2m and will be repaid when there is sufficient working capital. It is not anticipated that the loan will be repaid in 2012.