REG - Progressive Dig Med - Final Results <Origin Href="QuoteRef">PRODM.L</Origin> - Part 2
02/03/2015 07:01
- Part 2: For the preceding part double click ID:nRSB1715Ga
(pence) (2.50) 5.66
Reconciliation of basic weighted average number of shares to the diluted
weighted average number of shares:
31 December2014No'000s 31 December2013No'000s
Basic weighted average number of shares 75,941 74,487
Share options in issue at end of year 8,359 4,775
Diluted weighted average number of shares 84,300 79,262
* The share options in issue are anti-dilutive in respect of the diluted loss
per share calculation in 2014.
6. 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 market value at the date of grant. The market values were compared
to the Black-Scholes model and there were no significant differences.
The following assumptions were used in the valuation:
Award Tranche Grant Date Fair Value of Share Price at Grant Date ExercisePrice(Pence) Estimated Forfeiture rate p.a. Weighted Average of Remaining Contractual Life
Award 1 1 January 2011 £1.09 0.0714p 15% 2.5
Award 2 1 August 2011 £1.32 0.0714p 0% 2.5
Award 3 1 May 2012 £1.87 0.0714p 15% 2.5
Award 4 7 March 2014 £2.55 0.0714p 15% 2.5
Award 5 8 September 2014 £2.575 0.0714p 15% 2.7
Award 6 22 September 2014 £2.525 0.0714p 15% 2.5
Award 7 9 December 2014 £2.075 0.0714p 15% 2.6
Award 8 31 December 2014 £2.025 0.0714p 15% 2.5
The estimated forfeiture rate 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 the rate of lapsed options.
Each of the above awards are subject to the following vesting criteria:
Vesting Criteria
Group Achieves £10m EBITDA Group Achieves £18.5m EBITDA Group Achieves £23.5m EBITDA
Award 1-4 20% Vest 40% Vest 40% Vest
Award 5 N/a 30% Vest 70% Vest
Award 6 N/a 50% Vest 50% Vest
Award 7 N/a 40% Vest 60% Vest
Award 8 N/a 50% Vest 50% Vest
During 2013 the first vesting criteria of the Group achieving £10m Adjusted
EBITDA was met. As a result 1,701,156 options were exercised during 2014 at a
weighted exercise price of 0.0714 pence. The weighted average price of shares
exercised was £2.55.
The Remuneration Committee has increased the second and third vesting criteria
to £18.5 million and £23.5 million respectively as a result of the
acquisitions made during 2014 (2013: £15 million and £20 million
respectively).
The total charge recognised for the scheme during the twelve months to 31
December 2014 was £4,371,000 (2013: £1,127,000). The awards of the scheme are
settled with ordinary shares of the Company. Reconciliation of movement in the
number of options is provided below.
Option price(pence) Number ofoptions
31 December 2013 1/14th 4,775,050
Granted 1/14th 5,553,436
Vested 1/14th (1,701,156)
Forfeited 1/14th (268,450)
31 December 2014 1/14th 8,358,880
The following table summarises the Group's share options outstanding at 31
December 2014:
Reporting date Optionsoutstanding Option price(pence) Remaininglife (years)
31 December 2011 5,004,300 1/14th 3.7
31 December 2012 4,931,150 1/14th 4.3
31 December 2013 4,775,050 1/14th 3.3
31 December 2014 8,358,880 1/14th 2.5
7. Borrowings
31 December2014 31 December2013
£000s £000s
Current
Loans due within one year 1,283 -
Non-current
Long-term loans 15,651 5,851
Overdraft
The Group currently has a £2 million overdraft facility, which was not drawn
down upon at 31 December 2014. Interest is charged on the overdraft at 2.25%
over the Bank of England Base Rate.
Term loan and RCF
US$17m term loan and £20m RCF provided by The Royal Bank of Scotland
In July 2014, the Group refinanced its debt position. A US$17 million term
loan was issued by The Royal Bank of Scotland to partially fund the
acquisition of Current Analysis Inc (refer to acquisitions detailed in note
10). This is repayable in quarterly instalments over 4 years. The first
instalment is due for repayment in July 2015, with total repayments due in
2015 being US$2 million.
Additionally, The Royal Bank of Scotland issued a £20 million revolving
capital facility (RCF). As at 31 December 2014, the Group had drawn down £6.4
million of this facility. The £2 million overdraft discussed above and £1
million for potential interest rate hedging also offset against the RCF
leaving a remaining undrawn balance of £10.6 million as at 31 December 2014.
Interest is charged on the term loan and drawn down RCF at a rate of 2.25%
over the London Interbank Offered Rate. Interest is charged on the undrawn RCF
at 0.9%.
These new arrangements replaced the existing £6 million RCF which was arranged
in October 2011 and was due for repayment in 2015.
Non-current borrowings can be reconciled as follows:
31 December2014 31 December2013
£000s £000s
Term loan issued by The Royal Bank of Scotland 9,619 -
RCF issued by The Royal Bank of Scotland 6,375 6,000
Capitalised fees, net of amortised amount (343) (149)
15,651 5,851
8. Equity
Share capital
ERC Acquisition
The Group issued 76,191 ordinary shares as part of the consideration for ERC
Group Limited and its subsidiaries (as discussed in note 10). These shares
rank pari passu with the existing PDMG ordinary shares in issue.
Share Option Scheme
The Group issued 1,400,000 ordinary shares on 7 March 2014 and 305,080
ordinary shares on 14 March 2014 following the exercise of options by
employees pursuant to the vesting of the Company's Capital Appreciation Plan
(as discussed in note 6). These shares rank pari passu with the existing PDMG
ordinary shares in issue.
Allotted, called up and fully paid:
31 December 2014 31 December 2013
No'000 £000s No'000 £000s
Ordinary shares at 1 January (1/14th 74,487 53 - -
pence)
Sub-division of ordinary share capital - - 74,487 53
Issue of shares: partial consideration ERC 76 - - -
Issue of shares: other 4 - - -
Issue of shares: share based payments scheme 1,701 1 - -
Ordinary shares c/f 31 December (1/14th pence) 76,268 54 74,487 53
Deferred shares of £1.00 each 100 100 100 100
76,368 154 74,587 153
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. In respect of
equity, the Board has decided, in order to maximise flexibility in the near
term with regards to growth opportunities, not to return any cash by way of a
dividend at this time.
The Board is committed to keeping this policy under constant review and will
evaluate alternative methods of returning cash to shareholders when
appropriate.
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 Act 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.
9. Discontinued operations
As the business becomes more focussed on its Business Information offering, a
number of legacy non-core business units have been discontinued in recent
years.
During 2012, the Group made the decision to close the TMN email marketing
business unit, including the TMN, EDR and TAPPS businesses. During 2013, the
Group discontinued the US and European arms of its affiliate marketing
business. The email marketing and US / European affiliate marketing businesses
formed part of the Group's B2C Digital Marketing division.
Following a review of the performance of the Group's German subsidiary, it was
decided that it was no longer viable and its activities ceased in June 2014.
Additionally, on 1 July 2014, the Group disposed of its 75% shareholding in
Office Solutions Media Limited ('OSM'). The subsidiary company was no longer
deemed to be a strategic fit with the remainder of the Group; therefore the
shares were sold to OSM's minority shareholder. Additionally, towards the end
of 2014, the Group decided to discontinue the PDM (which was engaged in
business to business lead generation) and Market Research business units. The
key factors affecting this decision were a combination of continued
under-performance of these business units and lack of strategic fit with the
remainder of the group.
Pursuant to the provisions of IFRS 5 the above operations have been classified
as discontinued.
a) The results of the discontinued operations are as follows:
Year ended 31 December 2014 Year ended 31 December 2013
£000s £000s
Discontinued operations
Revenue 1,338 2,670
Cost of sales (1,958) (2,580)
Gross (loss)/ profit (620) 90
Distribution costs (19) (32)
Administrative costs (453) (768)
Other income 86 77
Operating loss from discontinued operations (1,006) (633)
Finance costs - -
Loss before tax from discontinued operations (1,006) (633)
Income tax expense (622) -
Loss for the year from discontinued operations (1,628) (633)
b) Loss before tax
Year ended 31 December 2014 Year ended 31 December 2013
This is arrived after charging: £000s £000s
Depreciation 6 -
c) Cash flows from discontinued operations
Year ended 31 December 2014 Year ended 31 December 2013
£000s £000s
Cash outflows from operating activities (1,281) (114)
Cash inflows/ (outflows) from investing activities 4 (24)
Cash outflows from financing activities (6) (8)
Total cash outflows from discontinued operations (1,283) (146)
10. Acquisitions
Pyramid Research
On 1 January 2014 the Group acquired the business and assets of Pyramid
Research for cash consideration of US$3,250,000 (£2,006,173).Pyramid is a
leading provider of business information and market analysis for the ICT
industry. Pyramid has a well regarded brand name and an expanding presence in
some of the world's fastest growing markets.
The amounts recognised for each class of assets and liabilities at the
acquisition date were as follows:
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