GlobalData Regulatory News (DATA)

29 July 2013

Progressive Digital Media Group Plc

Unaudited Interim Report For The Six Months Ended 30 June 2013

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

Strong first half results, a robust balance sheet and continued investment provide the foundation for further growth.

Key achievements in the six months

·; Business Intelligence continues to grow

·; Revenue and earnings growth across multiple channels

·; Cash and bank facilities to fund future growth

·; Normalisation of capital structure through share consolidation and re-capitalisation of reserves

Financial performance from continuing operations

·; EBITDA (1) increased by 33.9% to £4.8m (2012: £3.6m)

·; Adjusted EBITDA (2) increased by 23.5% to £5.4m (2012: £4.3m)

·; Adjusted EBITDA Margin (2) increased to 18.8% (2012: 16.8%)

·; Group revenue increased by 10.3% to £28.6m (2012: £25.9m)

·; Reported profit before tax grew by 77.2% to £3.5m (2012: £2.0m)

Our Business

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

·; A scalable asset base

·; Significant contracted and visible revenue streams

·; Globally exploitable business model

·; High gross margin product

Mike Danson, Chairman of Progressive Digital Media Group Plc, commented:

"Our first half results reflect good performances across multiple channels. We are increasingly confident that our focus on building premium Consumer and Technology Business Information services will provide the basis for continued long-term profitable growth. With this in mind, we are accelerating our investment in our sales force, product offering, content and delivery platforms in the near to medium-term."

Note 1: EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a charge of £0.4 million for share based payments (2012: £0.5 million).

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

Enquiries:

CHAIRMAN'S REVIEW

Our first half results reflect good performances across multiple channels. We are increasingly confident that our focus on building premium Consumer and Technology Business Information services will provide the basis for continued long-term profitable growth. With this in mind, we are accelerating our investment in our sales force, product offering, content and delivery platforms in the near to medium-term.

Along with organic growth, a key element of our strategy is growth through acquisition. A good example of acquiring a strategic fit business is Kable (acquired July 2012), which is a subscription based business and one of the UK's leading providers of technology expenditure intelligence. Furthermore, Kable provides an opportunity through organic investment and acquisition to grow into adjacent markets and new geographies. We have reviewed a number of other companies but they have not met our acquisition criteria.

We have performed well against the key objectives that we have set for the year:

·; We have continued to invest in our Business Information services and products, launching two new Consumer and Technology Intelligence Centers

·; We have expanded our geographic footprint, establishing sales teams in Singapore and China

·; Margin has improved with Adjusted EBITDA margin increasing by 2% to 18.8% and EBITDA margin up 3% to 16.9%

We are a focused business with a clear strategy and these results are just another step in the right direction. Good progress in the first six months of the year means that we remain confident of our full year results.

Group Performance

Group revenues increased by 10.3% to £28.6m (2012: £25.9m) with a good performance from Business Intelligence which now accounts for 57.1% of Group revenues (2012: 52.0%).

Adjusted EBITDA grew 23.5% to £5.4m (2012: £4.3m), with Adjusted EBITDA margin increasing by 2.0% to 18.8% (2012: 16.8%).

Profit before tax increased by £1.5m to £3.5m (2012: £2.0m), which is after a £0.4m non-cash charge for share based payments following the introduction in January 2011 of the long-term incentive plan for senior management (2012: £0.5m).

Business Information

Business Information, which includes Business Intelligence and Events and Marketing, now accounts for almost 98% of Group revenues and earnings. Business Information revenues grew by 11.3% in the first half (over the corresponding period in 2012) with:

·; Business Intelligence at +20.7%, and

·; Events and Marketing at 0.0%

Events and Marketing revenues were adversely impacted by the rephasing of a number of events from the first half of last year to the second half of this year.

Financial review

Short-term borrowing, which represents the outstanding amount due on the term loan issued by the Royal Bank of Scotland, has fallen to £0.5m (2012: £3.5m). Long-term borrowing was £5.8m (2012: £6.2m) and represents the revolving credit facility issued by the Royal Bank of Scotland. Net cash at 30 June 2013 was £6.7m (2012: £5.3m). Total equity has increased to £29.6m (2012: £23.1m).

The Group has prepared the accounts on a going concern basis and, based on current forecasts, the Group will meet its day-to-day working capital requirements from operating cash flows and existing banking facilities.

Outlook and prospects

We have had a good first half with revenue and EBITDA growth ahead of last year and in line with expectations. The performance of Business Intelligence provides the impetus for the second half of the year. Whilst we expect the economic climate to remain largely unchanged, we are confident that our strategy is sound and that we will continue to benefit from our investment in our people, our products and our delivery platforms. We remain confident of our full year results.

Mike Danson

ChairmanIndependent review report to the members of Progressive Digital Media Group Plc

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report of Progressive Digital Media Group Plc for the six months ended 30 June 2013 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cash flows. We have read the other information contained in the half yearly financial report which comprises the Chairman's review and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company's members those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

GRANT THORNTON UK LLP

AUDITOR

London29 July 2013

Consolidated income statement

The accompanying notes form an integral part of this financial report.

1 EBITDA is defined as earnings before interest, tax, depreciation, amortisation and impairment. 

2 We define Adjusted EBITDA as EBITDA adjusted for costs associated with acquisitions, integration, impact of foreign exchange contracts, shared based payments and restructure of the Group. We present Adjusted EBITDA as additional information because we understand that it is a measure used by certain investors and because it is used as the measure of segment profit or loss. However, other companies may present Adjusted EBITDA differently. EBITDA and Adjusted EBITDA are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS.

Consolidated statement of comprehensive income

The accompanying notes form an integral part of this financial report.

Consolidated statement of financial position

The accompanying notes form an integral part of this financial report.

Consolidated statement of changes in equity (unaudited)

The accompanying notes form an integral part of this financial report.

Consolidated statement of cash flows

The accompanying notes form an integral part of this financial report.

Notes to the interim financial statements

1. General information

Nature of operations

The principal activity of Progressive Digital Media Group Plc and its subsidiaries (together 'the Group') is the provision of premium business information, research services and marketing solutions for senior level decision makers.

Progressive Digital Media Group Plc ('the Company') is a company incorporated in the United Kingdom and listed on the Alternative Investment Market (AIM). The registered office of the Company is John Carpenter House, John Carpenter Street, London, EC4Y 0AN. The registered number of the Company is 3925319.

Basis of preparation

These interim financial statements are for the six months ended 30 June 2013. They have been prepared in accordance with IAS 34, Interim Financial Reporting as adopted in the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with Progressive Digital Media Group Plc's audited financial statements for the year ended 31 December 2012.

The financial information for the year ended 31 December 2012 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2012 have been filed with the Registrar of Companies and can be found on the Group's website www.progressivedigitalmedia.com. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006.

These interim financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. These interim financial statements have been prepared in accordance with the accounting policies detailed in the Group's financial statements for the year ended 31 December 2012. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

The interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the Company. These interim financial statements have been approved for issue by the Board of Directors.

Critical accounting estimates and judgements

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

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

Going concern

The Group has closing cash of £13.0 million as at 30 June 2013 and net cash of £6.7 million (2012: £5.3 million), being cash and cash equivalents less short and long-term borrowings. The Group also has an overdraft facility of £3 million, issued by the Royal Bank of Scotland, which was not utilised as at 30 June 2013.

The Group has outstanding loans of £6.5 million with the Royal Bank of Scotland. Of the outstanding loans, £0.5 million is due for repayment in less than one year and as such has been classified accordingly within the financial statements.

The Group considers the current cash balance, cash flow projections and 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 interim financial statements on a going concern basis.

Notes to the interim financial statements (continued)

2. Accounting policies

This interim report has been prepared based on the accounting policies detailed in the Group's financial statements for the year ended 31 December 2012.

3. Segment analysis

The principal activity of the Group is the provision of premium business information whose content is sold through a variety of platforms.

Following the discontinuation of the B2C email marketing business on 1 April 2012, the Group now considers the business as a single operating segment. IFRS 8 "Operating Segments" requires the segment information presented in the financial statements to be that which is used internally by the chief operating decision maker to evaluate the performance of the business and to decide how to allocate resources. The Group has identified the Board as its chief operating decision maker.

The Group is structured and managed centrally, with resources allocated to deliver content. Business information is therefore considered to be the operating segment of the Group.

The Group profit or loss is reported to the Board on a monthly basis and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items. A reconciliation of this measure to profit before tax is shown below:

Central overheads consists of corporate, HR, finance, IT and facilities expenses.

Geographical analysis

From continuing operations

Notes to the interim financial statements (continued)

4. Other expenses

5. Equity

Share capital

At the Annual General Meeting on 24 April 2013, shareholders approved the consolidation and sub-division of the Group's ordinary shares, which took effect on 25 April 2013.

Ordinary shares were consolidated on the basis of 1 consolidated ordinary share of 10 pence for every 1,000 existing ordinary shares of 0.01 pence each, immediately followed by a sub-division of the consolidated ordinary shares on the basis of 140 new ordinary shares for each consolidated ordinary share. The overall result of the consolidation and sub-division was that every 1,000 existing ordinary shares of 0.01 pence were consolidated and sub-divided into 140 new ordinary shares of 1/14th pence.

Following the consolidation and sub-division of shares, the number of share options and their comparatives have been restated accordingly in note 7.

Notes to the interim financial statements (continued)

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

In order to enable the directors to pay dividends in the future when considered appropriate, at the Annual General Meeting on 24 April 2013 shareholders approved the cancellation of the parent company's share premium account (the "Capital Reduction"). The Capital Reduction took effect on 23 May 2013 following confirmation by the Court. By way of undertaking to the Court, the Company has constituted a special reserve for the protection of its creditors as at the effective date of the Capital Reduction.

The table shows the capital reduction transactions in the parent company:

The Company has two classes of shares. The ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the Company.

The deferred shares do not confer upon the holders the right to receive any dividend, distribution or other participation in the profits of the Company. The deferred shares do not entitle the holders to receive notice of or to attend and speak or vote at any general meeting of the Company. On distribution of assets on liquidation or otherwise, the surplus assets of the Company remaining after payments of its liabilities shall be applied first in repaying to holders of the deferred shares the nominal amounts and any premiums paid up or credited as paid up on such shares, and second the balance of such assets shall belong to and be distributed among the holders of the ordinary shares in proportion to the nominal amounts paid up on the ordinary shares held by them respectively.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights.

No person has any special rights of control over the Company's share capital and all its issued shares are fully paid.

With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the principles of the UK Corporate Governance Code, the Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of Directors are described in the Board Terms of Reference, copies of which are available on request.

Notes to the interim financial statements (continued)

6. Earnings per share

The calculation of the basic earnings per share is 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. Following the consolidation and sub-division of shares, as discussed in note 5, the earnings per share calculations and their comparatives have been restated.The Group also 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:

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

Notes to the interim financial statements (continued)

7. Share based payments

The Group created a share option scheme during the year ended 31 December 2010 and granted the first options under the scheme on 1 January 2011 to certain senior employees. Each option granted converts to one ordinary share on exercise. A participant may exercise their options (subject to employment conditions) at any time during a prescribed period from the vesting date to the date the option lapses. For these options to be exercised the Group's earnings before interest, taxation, depreciation and amortisation, as adjusted by the Remuneration Committee for significant or one-off occurrences, must exceed certain targets. The fair values of options granted were determined using the Black-Scholes model and takes into account factors specific to the share option plan, such as the vesting period.

Following the consolidation and sub-division of shares, as discussed in note 5, the number of share options and their comparatives has been restated.

The following assumptions were used in the valuation:

The volatility assumption is based upon management's expectation over the number of options that will lapse over the vesting period. The assumptions were determined when the scheme was set up in 2011 and are reviewed annually. Management believe the current assumptions to be reasonable based upon rate of lapsed options.

The total charge recognised for the scheme during the six months to 30 June 2013 was £407,000 (2012: £508,000). The awards of the scheme are settled with ordinary shares of the Company. No options were exercised during the six months to 30 June 2013.

Notes to the interim financial statements (continued)

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;

b) Loss before tax

c). Cash flows from discontinued operations

Notes to the interim financial statements (continued)

9. Related party transactions

Mike Danson, Progressive Digital Media Group's Chairman, owns 67.72% of the Company's ordinary shares as at 30 June 2013. Mike Danson owns a number of businesses that interact with Progressive Digital Media Group. A programme is underway to reduce related party transactions. The principal transactions are as follows:

Accommodation

Progressive Digital Media Group rents two properties from Estel Property Investments, a company owned by Mike Danson. The total rental expense in relation to the buildings owned by Estel Property Investments for the 6 months to 30 June 2013 was £464,300 (2012: £842,817 net of a recharge of £283,983).

Corporate support services

Corporate support services are provided to other companies owned by Mike Danson, principally finance, human resources, IT and facilities management. These are recharged to companies that consume these services based on specific drivers of costs, such as proportional occupancy of buildings for facilities management, headcount for human resources services, revenue or gross profit for finance services and headcount for IT services. The recharge made from Progressive Digital Media Group to these companies for the 6 months to 30 June 2013 was £166,900 (2012: £749,800).

Revenue License Agreement

Progressive Digital Media Group has entered into a licensing agreement with World Marketing Intelligence Ltd ("WMI"), wholly owned by Mike Danson, to sell WMI's Construction Intelligence Center ("CIC") content through the Group's own websites. Under the terms of the agreement, 20% of revenue generated from the sale of CIC content is payable to WMI. The total revenue recognised in Progressive Digital Media Group for the 6 months to 30 June 2013 is £0.5 million (2012: £0.4 million).

Amounts outstanding

The Group has taken advantage of the exemptions contained within IAS 24 - Related Party Disclosures from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.

The amounts outstanding for other related parties were:

The company has right of set off over these amounts.

Advisers

Company Secretary

Stephen Bradley

Head Office and Registered Office

John Carpenter House

John Carpenter Street

London

EC4Y 0AN

Tel: + 44 (0) 20 7936 6400

Nominated Adviser and Broker

One Bartholomew Lane

London

EC2N 2AX

Auditor

Grant Thornton UK LLP

Grant Thornton House

Melton Street

London

NW1 2EP

Registrars

Capita Registrars Limited

Northern House

Woodsome Park

Fenay Bridge

Huddersfield

West Yorkshire

HD8 0GA

Solicitors

Osborne Clarke

2 Temple Back East

Temple Quay

Bristol

BS1 6EG

Bankers

The Royal Bank of Scotland plc

280 Bishopsgate

London

EC2M 4RB

Registered number

Company No. 3925319