REG - Progressive Dig Med - Interim Results <Origin Href="QuoteRef">PRODM.L</Origin> - Part 2
27/07/2015 07:01
- Part 2: For the preceding part double click ID:nRSa0949Ua
(0.43) (1.79)
Total
Basic
(Loss)/ profit for the period attributable to ordinary shareholders of the parent company (£000s) (422) 688 (2,106)
Weighted average number of shares (000s) 76,268 75,609 75,941
Basic (loss)/ earnings per share (pence) (0.55) 0.91 (2.77)
Diluted
(Loss)/ profit for the period attributable to ordinary shareholders of the parent company (£000s) (422) 688 (2,106)
Weighted average number of shares (000s)* 83,949 81,983 84,300
Diluted (loss)/ earnings per share (pence) (0.50) 0.84 (2.50)
Notes to the interim financial statements (continued)
5. Earnings per share (continued)
Reconciliation of basic weighted average number of shares to the diluted
weighted average number of shares:
6 months to30 June 2015UnauditedNo'000s 6 months to30 June 2014 UnauditedNo'000s Year to 31 December 2014AuditedNo'000s
Basic weighted average number of shares 76,268 75,609 75,941
Share options in issue at end of year 7,681 6,374 8,359
Diluted weighted average number of shares 83,949 81,983 84,300
* The share options in issue are anti-dilutive in respect of the diluted loss
per share calculation in 2015.
6. Intangible assets
Software Asset under construction Customer relationships Brands IP rights Goodwill Total
£000s £000s £000s £000s £000s £000s £000s
Cost
As at 31 December 2014 5,359 - 14,193 1,893 12,267 41,022 74,734
Additions 63 340 - - - - 403
Fair value adjustments (17) - - - - 216 199
Foreign currency retranslation (5) - - - - - (5)
As at 30 June 2015 5,400 340 14,193 1,893 12,267 41,238 75,331
Amortisation
As at 31 December 2014 (3,360) - (9,633) (200) (9,778) (9,360) (32,331)
Charge for the year (558) - (415) (181) (311) - (1,465)
Foreign currency retranslation 4 - - - - - 4
As at 30 June 2015 (3,914) - (10,048) (381) (10,089) (9,360) (33,792)
Net book value
As at 30 June 2015 1,486 340 4,145 1,512 2,178 31,878 41,539
As at 31 December 2014 1,999 - 4,560 1,693 2,489 31,662 42,403
A fair value adjustment was booked to software during the period. This was in
relation to Current Analysis Inc, which was acquired by the Group on 30 July
2014. Further fair value adjustments have been booked to goodwill in relation
to Current Analysis Inc during the period.
Notes to the interim financial statements (continued)
7. Equity
Share capital
Allotted, called up and fully paid:
30 June 2015Unaudited 30 June 2014Unaudited 31 December 2014Audited
No'000s £000s No'000s £000s No'000s £000s
Ordinary shares at 1 January (1/14th pence) 76,268 54 74,487 53 74,487 53
Issue of shares: partial consideration ERC - - 76 - 76 -
Issue of shares: other - - 4 - 4 -
Issue of shares: share option scheme - - 1,701 1 1,701 1
Ordinary shares c/f (1/14th pence) 76,268 54 76,268 54 76,268 54
Deferred shares of £1.00 each 100 100 100 100 100 100
Total allotted, called up and fully paid 76,368 154 76,368 154 76,368 154
The issue of shares in the prior year related to the following:
ERC Acquisition
The Group issued 76,191 ordinary shares as part of the consideration for ERC
Group Limited and its subsidiaries. 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.
These shares rank pari passu with the existing PDMG ordinary shares in issue.
Capital management
The Group's capital management objectives are:
· To ensure the Group's ability to continue as a going concern
· To fund future growth and provide an adequate return to shareholders
and, when appropriate, distribute dividends
The capital structure of the Group consists of net debt, which includes
borrowings (note 11) and cash and cash equivalents, and equity.
The Company has two classes of shares:
· Ordinary shares carry no right to fixed income and each share carries
the right to one vote at general meetings of the Company
· 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.
Notes to the interim financial statements (continued)
7. Equity (continued)
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.
8. 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 Exercise Price(Pence) Estimated Forfeiture rate p.a. Weighted Average of Remaining Contractual Life
Award 1 1 January 2011 £1.09 0.0714p 15% 2.0
Award 3 1 May 2012 £1.87 0.0714p 15% 2.0
Award 4 7 March 2014 £2.55 0.0714p 15% 2.0
Award 5 8 September 2014 £2.575 0.0714p 15% 2.2
Award 6 22 September 2014 £2.525 0.0714p 15% 2.0
Award 7 9 December 2014 £2.075 0.0714p 15% 2.1
Award 8 31 December 2014 £2.025 0.0714p 15% 2.0
Award 9 21 April 2015 £2.05 0.0714p 15% 2.1
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.
The share options held within Award 2 were fully forfeited during 2015.
Each of the above awards are subject to the following vesting criteria:
Vesting Criteria
Group Achieves £10m EBITDA (met in 2014) 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
Award 9 N/a 40% Vest 60% Vest
Notes to the interim financial statements (continued)
8. Share based payments (continued)
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 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 six months to 30 June
2015 was £1,485,000 (2014: £3,031,000).
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 2014 1/14th 8,358,880
Granted 1/14th 1,009,960
Forfeited 1/14th (1,687,400)
30 June 2015 1/14th 7,681,440
9. Discontinued operations
As the business becomes more focused on its Business Information offering, a
number of legacy non-core business units have been discontinued in recent
years.
During 2014, several of the Group's operations were discontinued:
· The Group's German subsidiary was considered no longer viable;
· The Group disposed of Office Solutions Media Limited, as the subsidiary
was no longer considered a strategic fit;
· One of the Group's business to business lead generation operations was
discontinued as it was no longer a strategic fit or a viable business;
· One of the Group's market research businesses units was discontinued
due to continued under performance.
The costs in 2015 relate to final costs incurred to close the businesses which
were discontinued during 2014.
Pursuant to the provisions of IFRS 5 the above operations have been classified
as discontinued.
Notes to the interim financial statements (continued)
9. Discontinued operations (continued)
a) The results of the discontinued operation are as follows;
6 months to 30 June 2015Unaudited 6 months to 30 June 2014Unaudited Year to 31 December 2014Audited
£000s £000s £000s
Discontinued operations
Revenue (318) 1,180 1,338
Cost of sales (494) (1,048) (1,958)
Gross (loss)/ profit (812) 132 (620)
Distribution costs - (19) (19)
Administrative costs (283) (336) (453)
Other (expenses)/ income - (123) 86
Loss before tax from discontinued operations (1,095) (346) (1,006)
Income tax credit/ (charge) 220 - (622)
Loss for the period from discontinued operations (875) (346) (1,628)
b) Loss before tax
6 months to 30 June 2015Unaudited 6 months to 30 June 2014Unaudited Year to 31 December 2014Audited
This is arrived at after charging: £000s £000s £000s
Depreciation - 3 6
c) Cash flows from discontinued operations
6 months to 30 June 2015Unaudited 6 months to 30 June 2014Unaudited Year to 31 December 2014Audited
£000s £000s £000s
Cash outflows from operating activities (79) (494) (1,281)
Cash inflows from investing activities - - 4
Cash outflows from financing activities - (6) (6)
Total cash outflows from discontinued operations (79) (500) (1,283)
Notes to the interim financial statements (continued)
10. Related party transactions
Mike Danson, Progressive Digital Media Group's Chairman, owned 66.14% of the
Company's ordinary shares as at 30 June 2015. Mike Danson owns a number of
businesses that interact with Progressive Digital Media Group. 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 2015 was £1,053,000 (2014: £974,700).
Corporate support services
Corporate support services are provided to and from 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 2015 was £192,400 (2014: recharge from other companies owned by
Mike Danson to Progressive Digital Media Group of £346,300).
Revenue License Agreement
During the period, Progressive Digital Media Group terminated a licensing
agreement with World Marketing Intelligence Ltd ("WMI"), a company 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 was payable to WMI. The
total revenue recognised in Progressive Digital Media Group for the 6 months
to 30 June 2015 was £nil (2014: £nil).
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:
30 June2015Unaudited 30 June2014Unaudited 31 December 2014Audited
£000s £000s £000s
Global Data Ltd 2 31 82
Estel Property Group Ltd (606) (4,993) (5,143)
Progressive Media Venture Ltd 784 (11) (234)
New Statesman Ltd - 2,532 2,689
Progressive Media International Ltd - 2,654 2,945
Progressive Global Media Ltd - 85 73
180 298 412
The Group has right of set off over these amounts.
Notes to the interim financial statements (continued)
11. Borrowings
30 June 2015Unaudited 30 June 2014Unaudited 31 December 2014Audited
£000s £000s £000s
Current
Loans due within one year 2,543 - 1,283
Non-current
Long-term loans 14,336 5,892 15,651
Overdraft
The Group currently has a £2 million overdraft facility, which was not drawn
down upon at 30 June 2015. 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. This is repayable in quarterly
instalments over 4 years. The first instalment is due for repayment in July
2015, with total repayments due within the next 12 months being US$4 million.
Additionally, The Royal Bank of Scotland issued a £20 million revolving
capital facility (RCF). As at 30 June 2015, the Group had drawn down £6.4
million of this facility.
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:
30 June 2015Unaudited 30 June 2014Unaudited 31 December 2014Audited
£000s £000s £000s
Term loan issued by The Royal Bank of Scotland 8,266 - 9,619
RCF issued by The Royal Bank of Scotland 6,375 6,000 6,375
Capitalised fees, net of amortised amount (305) (108) (343)
14,336 5,892 15,651
Notes to the interim financial statements (continued)
12. Post balance sheet events
The Group today announced its agreement to acquire the Datamonitor Financial,
Datamonitor Consumer, MarketLine and Verdict businesses from Informa Plc for
£25.0m in cash. The sale will be effected by Informa transferring the above
named businesses to Verdict Research Limited, the entire share capital of
which will be acquired by the Group. The acquisition is being funded by
extending the existing facilities of £30.0m to £40.0m, which are held with The
Royal Bank of Scotland. The additional facility is a term loan of £10.0m, with
the remainder of the consideration being funded through draw down of the
remaining RCF facility and use of existing cash reserves.
The acquisition of these businesses supports the Group's strategy of expanding
its premium subscription based services into global markets. The businesses
being acquired complement the Group's existing Consumer proposition and should
provide a platform for growth over the medium term.
For the financial year ended 31 December 2014, revenues for the businesses
being acquired were approximately £17.8m with adjusted earnings which exclude
central overheads of circa £3.0m.
Further analysis on intangible assets generated as part of the acquisition is
not disclosed due to the proximity of the acquisition date to the interim
announcement date.
Advisers
Company Secretary
Graham Lilley
Head Office and Registered Office
John Carpenter House
John Carpenter Street
London
EC4Y 0AN
Tel: + 44 (0) 20 7936 6400
Nominated Adviser and Broker
Nplus1 Singer Advisory LLP
1 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. 03925319
This information is provided by RNS
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