26 July 2012 Progressive Digital Media Group Plc Interim Report For The Six Months Ended 2012 Progressive Digital Media Group Plc (PDMG) and its subsidiaries ( the Group ) is a content driven media company producing premium business information. The Group enables organisations to gain competitive advantage by providing unique, high quality information and services across multiple platforms. Highlights Financial performance from continuing Adjusted EBITDA (1) increased by 10.3% to 4.3m (: 3.9m). Adjusted EBITDA Margin (1) increased to 16.6% (: 15.5%) Group revenue increased by 2.8% to 25.9m (: 25.2m) with Business Intelligence revenues up by 12.5% to 13.5m (: 12.0m) Business Intelligence revenues account for 52.1% of Group revenue (: 47.6%) Reported profit before tax of 2.0m (: 1.2m) Key achievements in the six months Good progress has been made in the Business Intelligence division, (part of our Business Information portfolio), with the expansion and training of the sales team and the recruitment of senior sales executives, all of whom are highly experienced in the sector. The benefits of this are expected to begin to be seen in the second half of the year. Successful completion of a 20m share placing to fund acquisitions. Agreement to acquire Kable, one of the UK s leading providers of technology expenditure intelligence. Kable provides business information, tactical intelligence, research, analysis and consultancy to a number of the UK s leading blue chip companies. The acquisition completed on 2 July 2012. (Note 8). Exit from the consumer email marketing sector. Mike Danson, Chairman of Progressive Digital Media Group Plc, commented: Our first half results demonstrate that we have made good progress across a number of key metrics delivering increased revenues, margin and earnings against the prior year comparatives. We continue to focus on those areas which present the best opportunities for growth such as Business Intelligence, which pleasingly now accounts for over half of Group revenues. Our results, together with the fundraising and acquisition of Kable form not only a good platform for future growth but also have allowed the Group to exit from the less profitable consumer email marketing sector. Moreover, the launch of the new intelligence centres and the performance of our Business Intelligence division as a whole have positioned us well to develop the business rapidly from now on. Note 1: 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. Note 2: EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a charge of 0.5 million for share based payments (: 0.4 million).
Enquiries: Progressive Digital Media Group Plc 0207 936 6400 Mike Danson, Chairman Simon Pyper, Group Managing Director Singer Capital Markets, NOMAD and Broker 0203 205 7500 James Maxwell Nick Donovan Hudson Sandler 0207 796 4133 Michael Sandler 2
CHAIRMAN S REVIEW Strong first half results, coupled with a successful fundraising and the completion of the Kable acquisition (2 July 2012) provide a solid platform for further growth. Our first half results demonstrate that we have made good progress across a number of key metrics delivering increased revenues, margin and earnings against the prior year comparatives. Additionally, we continue to focus on those areas which present the best opportunities for growth such as Business Intelligence, which reported revenue growth of 12.5% for the period and pleasingly now accounts for over half of Group revenues. Our results, together with the fundraising and acquisition of Kable form not only a good platform for future growth but also have allowed the Group to exit from the less profitable consumer email marketing sector. The successful 20 million share placing completed on 30 April 2012 provides the Group with the financial resources to make further acquisitions which are a strategic fit. The recent acquisition of Kable is a good example of acquiring a strategic fit business. Kable, a subscription based business information company is one of the United Kingdom s leading providers of business intelligence on technology expenditure. Additionally, Kable has credible brand equity, industry leading renewal rates and good opportunities in adjacent markets for future growth. The acquisition is discussed further in note 8 of these interim financial statements. Acquisitions constitute an important part of our growth strategy. However, we are equally if not more focused on delivering long term sustainable growth from our organic business and in particular from our portfolio of Business Intelligence assets. Pleasingly, our Business Intelligence division performed well in the first half and we expect this to continue as we realise the benefits from our investment in our content, our delivery platforms and our sales infrastructure. We believe the results for the first six months provide momentum for the remainder of the year and we are confident that our full year results will be in line with market estimates. Group Performance Group revenues increased by 2.8% to 25.9m (: 25.2m); with a good performance from Business Intelligence being partially offset by a rephasing of revenues from our Events and Marketing business units from the first half of last year to the second half of this year. Adjusted EBITDA grew 10.3% to 4.3m (: 3.9m), with Adjusted EBITDA margin increasing by 1.1% to 16.6% (: 15.5%). Profit before tax increased by 0.8m to 2.0m (: 1.2m), which is after a 0.5m non-cash charge for share based payments following the introduction in January of the long-term incentive plan for senior management (: 0.4m). Business Information Business Information, which includes our Business Intelligence and Events and Marketing business units, now accounts for almost 96% of Group revenues and earnings. Business Information revenues grew by 4.2% for the first half (over the corresponding period in ) with: Business Intelligence at +12.5%, and Events and Marketing at -5.3% 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. B2C Digital Marketing Given the overall performance of the Group, and our focus on Business Intelligence, we have decided to withdraw from the legacy consumer email marketing business. Consequently, we are reporting this under discontinued and a loss of 1.5m has been recorded for the first half of the year. Accordingly, our comparative statements have been restated (Note 5). 3
Board Changes We continue to strengthen our management team and the Group has over the past few months appointed a number of senior executives to positions within the Group and in particular within our Business Intelligence division. Furthermore, we have decided to re-focus the Board and reduce the number of executive directors to myself and Simon Pyper (Group Managing Director). Consequently Mark Meek (CEO) and Stephen Bradley (Finance Director) will be leaving the Board. Stephen Bradley will remain in his current role and as before will report to Simon Pyper; however Mark Meek has decided to leave the Group and the Board would like to thank him for his contribution and wishes him well for the future. With the first part of our strategy now complete the Board s objectives will be to focus on operational excellence and the continued investment in, and development of, our premium business information and related products. Financial review The Group s statement of financial position at 2012 reflects the recent share placement completed on 30 April 2012. Cash and cash equivalents were 15.0m ( 0.4m). Short-term borrowings which consist of the outstanding amount on the loan that funded the Canadean acquisition and an instalment of the RBS loan, have fallen to 3.5m ( 13.4m). Long-term borrowings were 6.2m ( 9.8m) and represent the remaining loan provided by RBS falling due after more than one year. At the time of the share placing an automatic repayment of 4m was made to RBS and Michael Danson converted 8m of his subordinated interest free loan to equity with the Group repaying the remainder of that loan. Net cash at is 5.3m (: net debt of 22.7m), with net cash being cash and cash equivalents less short and long term borrowings. Total equity has increased to 23.1m ( 3.2m). 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 completed fundraising coupled with the acquisition of Kable and the good performance of our Business Intelligence division provide a strong footing for the second half of the year and beyond. Whilst we recognise that the economic climate remains uncertain, we are confident that we are on the right course and that we will continue to benefit from our investment in our people, our products and our delivery platforms. Mike Danson Chairman 4
Independent 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 2012 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 (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 2012 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 London 26 July 2012 5
Consolidated income statement Notes 6 months to 2012 6 months to Year to 31 December Continuing 000s 000s 000s Revenue 3 25,895 25,180 50,422 Cost of sales (15,555) (14,410) (28,798) Gross profit 10,340 10,770 21,624 Distribution costs (463) (496) (971) Administrative costs (6,513) (7,321) (15,353) Other expenses 4 (1,078) (1,455) (3,329) Operating profit 2,286 1,498 1,971 Analysed as: Adjusted EBITDA 2 4,340 3,943 7,235 Items associated with acquisitions and restructure of the group 4 (296) - (639) Other adjusting items 4 (447) (439) (962) EBITDA 1 3,597 3,504 5,634 Amortisation (939) (1,625) (2,954) Depreciation (372) (381) (709) Operating profit 2,286 1,498 1,971 Finance costs (318) (270) (552) Profit before tax 1,968 1,228 1,419 Income tax (charge)/credit (442) (689) 110 Profit for the period from continuing 1,526 539 1,529 (Loss)/ profit for the year from discontinued operation 5 (1,477) 177 (9,349) Profit/(loss) for the period 49 716 (7,820) Attributable to: Equity holders of the parent 26 693 (7,862) Non-controlling interest 23 23 42 Basic earnings/(loss) per share attributable to equity holders: Basic earnings/ (loss) per share (pence) 0.01 0.18 (2.09) Diluted earnings/ (loss) per share (pence) 0.01 0.17 (2.09) 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. 6
Consolidated statement of comprehensive income 6 months to 2012 6 months to Year to 31 December 000s 000s 000s Profit/(loss) for the period 49 716 (7,820) Other comprehensive income Translation of foreign entities 18 35 2 Other comprehensive income, net of tax 18 35 2 Total comprehensive income/(loss) for the period 67 751 (7,818) Attributable to Equity holders of the parent 44 728 (7,860) Non-controlling interest 23 23 42 The accompanying notes form an integral part of this financial report. 7
Consolidated statement of financial position Notes 2012 31 December 000s 000s 000s Non-current assets Property, plant and equipment 1,373 1,657 1,712 Intangible assets 24,192 35,803 25,106 Deferred tax assets 1,041 561 1,500 26,606 38,021 28,318 Current assets Inventories 324 179 79 Current tax receivable - 42 - Trade and other receivables 17,944 16,691 17,538 Short-term derivative assets 7 - - Cash and cash equivalents 14,995 409 2,252 33,270 17,321 19,869 Total assets 59,876 55,342 48,187 Current liabilities Trade and other payables (24,666) (25,582) (25,221) Short-term borrowings 7 (3,500) (13,353) (4,807) Current tax payable (430) (120) (389) Short-term derivative liabilities - (251) (54) Short-term provisions (843) (980) (767) (29,439) (40,286) (31,238) Non-current liabilities Long-term provisions (863) (1,547) (1,211) Deferred tax liabilities (257) (434) (372) Long-term borrowings 7 (6,226) (9,769) (19,936) Long-term derivative liabilities - (62) - (7,346) (11,812) (21,519) Total liabilities (36,785) (52,098) (52,757) Net assets/(liabilities) 23,091 3,244 (4,570) Equity Share capital 6 153 207 207 Share premium account 6 71,368 44,257 44,257 Other reserve (37,128) (37,128) (37,128) Foreign currency translation reserve 25 40 7 Retained loss (11,438) (4,238) (12,010) Equity attributable to equity holders of the parent 22,980 3,138 (4,667) Non-controlling interest 111 106 97 Total equity 23,091 3,244 (4,570) The accompanying notes form an integral part of this financial report. 8
Share capital Share premium account Other reserve Foreign currency translation reserve Retained loss Equity attributable to equity holders of the parent Non-controlling interest Total equity Consolidated statement of changes in equity (unaudited) 000s 000s 000s 000s 000s 000s 000s 000s Balance at 1 January 207 44,257 (37,128) 5 (5,305) 2,036 83 2,119 Profit for the period - - - - 693 693 23 716 Other comprehensive income: Translation of foreign entities - - - 35-35 - 35 Total comprehensive income for the period - - - 35 693 728 23 751 Transactions with owners: Share-based payments - - - - 374 374-374 Balance at 207 44,257 (37,128) 40 (4,238) 3,138 106 3,244 (Loss)/ profit for the period - - - - (8,555) (8,555) 19 (8,536) Other comprehensive income: Translation of foreign entities - - - (33) - (33) - (33) Total comprehensive (loss)/ income for the - - - (33) (8,555) (8,588) 19 (8,569) period Transactions with owners: Dividends - - - - - - (28) (28) Share based payments - - - - 783 783-783 Balance at 31 December 207 44,257 (37,128) 7 (12,010) (4,667) 97 (4,570) Profit for the period - - - - 26 26 23 49 Other comprehensive income: Translation of foreign entities - - - 18-18 - 18 Total comprehensive income for the period - - - 18 26 44 23 67 Transactions with owners: Issue of share capital 15 27,042 - - - 27,057-27,057 Transfer between reserves (69) 69 - - - - - - Dividends - - - - - - (9) (9) Share based payments - - - - 508 508-508 Excess of deferred tax on share based payments recognised directly in equity - - - - 38 38-38 Balance at 2012 153 71,368 (37,128) 25 (11,438) 22,980 111 23,091 The accompanying notes form an integral part of this financial report. 9
Consolidated statement of cash flows 6 months to 2012 6 months to Year to 31 December Continuing 000s 000s 000s Cash flows from operating activities Profit for the period 1,526 539 1,529 Adjustments for: Depreciation 372 381 709 Amortisation 939 1,625 2,954 Finance expense 318 270 552 Taxation expense recognised in profit or loss 442 689 (110) Share option charge 508 374 1,157 (Increase)/ decrease in trade and other receivables (1,751) 30 (612) Increase in inventories (245) (132) (32) Decrease in trade payables (524) (1,896) (1,854) Revaluation of derivatives (61) 65 (195) Movement in provisions (272) (284) (833) Cash generated from 1,252 1,661 3,265 Interest paid (258) (163) (230) Income taxes received (19) (149) 16 Net cash from operating activities 975 1,349 3,051 Cash flows from investing activities Purchase of property, plant and equipment (47) (82) (573) Purchase of intangible assets (150) (72) (516) Net cash used in investing activities (197) (154) (1,089) Cash flows from financing activities Proceeds from long-term borrowings - - 11,667 Proceeds from placement of shares 27,057 - - Repayment of long-term borrowings (13,769) - (6,500) Net cash generated from financing activities 13,288-5,167 Net increase in cash and cash equivalents from 14,066 1,195 7,129 continuing Net (decrease)/ increase in cash and cash equivalents (33) 707 (53) from discontinued Net increase in cash and cash equivalents 14,033 1,902 7,076 Cash and cash equivalents at beginning of period 962 (6,114) (6,114) Cash and cash equivalents at end of period 14,995 (4,212) 962 Balance sheet reconciliation: Cash and cash equivalents 14,995 409 2,252 Overdraft (included in short-term borrowings) - (4,621) (1,290) Cash and cash equivalents at end of period 14,995 (4,212) 962 The accompanying notes form an integral part of this financial report. 10
Notes to the interim financial statements 1. General information Nature of Progressive Digital Media Group Plc and its subsidiaries (together the Group ) principal activity is the provision of premium business information, research services and marketing solutions for senior level decision makers. Refer to note 3 for further information about the Group s operating segments. 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 2012. They have been prepared in accordance with IAS 34, Interim Financial Reporting. 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. The financial information for the year ended 31 December 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 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. 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 meets its day-to-day working capital requirements from an overdraft facility of 3.0 million, none of which was utilised as at 2012. Based on cash flow projections the Group considers the existing financing facilities to be adequate to meet short-term commitments. The Group has one outstanding loan from the Chairman and majority shareholder, Michael Danson. The initial loan of 9.0 million loan was used to fund the acquisition of Canadean and has 2.0 million outstanding as at 2012. 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 interim financial statements on a going concern basis. 11
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. 3. Segment analysis The Group considers the business from a divisional perspective (Business Information and B2C Digital Marketing). 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 focused on the B2B space, providing content-rich, web-based information products, via its business intelligence and events and marketing divisions. B2C Digital Marketing B2C Digital Marketing is focused on the B2C market, providing innovative, online digital marketing, research and panel solutions. On 1 April 2012 the Group made the decision to close the TMN email marketing business unit, including the TMN, EDR and TAPPS businesses, which 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 (see note 5). 12
Notes to the interim financial statements (continued) 3. Segment analysis (continued) Six months to June 2012 Business Information B2C Digital Marketing Total 000s 000s 000s From continuing Revenue from external customers 24,963 932 25,895 Segment result 9,031 386 9,417 From discontinued Revenue from external customers - (344) (344) Segment result - (1,138) (1,138) Six months to June Business Information B2C Digital Marketing 000s 000s 000s From continuing Revenue from external customers 23,967 1,213 25,180 Segment result 8,306 750 9,056 Total From discontinued Revenue from external customers - 2,498 2,498 Segment result - 214 214 Year to December Business Information B2C Digital Marketing 000s 000s 000s From continuing Revenue from external customers 48,201 2,221 50,422 Segment result 16,956 1,281 18,237 Total From discontinued Revenue from external customers - 3,931 3,931 Segment result - 77 77 13
Notes to the interim financial statements (continued) 3. Segment analysis (continued) Reconciliation of segment result to profit / (loss) before tax Continuing 6 months to 2012 Continuing 6 months to Continuing Year to 31 December Discontinued 6 months to 2012 Discontinued 6 months to Discontinued Year to 31 December 000s 000s 000s 000s 000s 000s Segment result 9,417 9,056 18,237 (1,138) 214 77 Unallocated overheads (5,077) (5,113) (11,002) - - - Other expenses (note 4) (1,078) (1,455) (3,329) (325) (25) (9,411) Depreciation (372) (381) (709) (14) (6) (12) Amortisation (604) (609) (1,226) - (6) (8) Finance costs (318) (270) (552) - - (14) Profit/(loss) before tax 1,968 1,228 1,419 (1,477) 177 (9,368) 4. Other expenses Continuing Continuing Continuing Discontinued Discontinued Discontinued 6 months to 2012 6 months to Year to 31 December 6 months to 2012 6 months to Year to 31 December 000s 000s 000s 000s 000s 000s Redundancy and restructuring 301-432 200 - - Property related provisions (51) - (1) - - - Deal costs 46 - - - - - Revaluation of currency collar (61) 65 (195) - - - Share option expense 508 374 1,157 - - - Amortisation of acquired intangibles 335 1,016 1,728 25 25 50 M&A costs - - 208 - - - Impairment - - - 100-9,361 1,078 1,455 3,329 325 25 9,411 14
Notes to the interim financial statements (continued) 5. Discontinued 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; 6 months to 2012 6 months to Year to 31 December Discontinued 000s 000s 000s Revenue (344) 2,498 3,931 Cost of sales (560) (1,750) (2,819) Gross profit (904) 748 1,112 Administrative costs (248) (546) (1,055) Other expenses (325) (25) (9,411) Operating (loss)/ profit from discontinued (1,477) 177 (9,354) Finance costs - - (14) (Loss)/ profit before tax from discontinued (1,477) 177 (9,368) Income tax (charge)/credit - - 19 (Loss)/ profit for the period from discontinued (1,477) 177 (9,349) b). (Loss)/ profit before tax 6 months to 2012 6 months to Year to 31 December This is arrived after charging: 000s 000s 000s Depreciation 14 6 12 Amortisation - 6 8 Amortisation of acquired intangible assets 25 25 50 Impairment of intangible asset 100-9,361 c). Cash flows from discontinued 6 months to 2012 6 months to Year to 31 December 000s 000s 000s Cash flows from operating activities (33) 712 (47) Cash flows from investing activities - (5) (6) Net cash (outflows)/ inflows from discontinued (33) 707 (53) 15
Notes to the interim financial statements (continued) 6. Equity Authorised share capital: 2012 31 Dec '000s '000s '000s 1,000,000,000 Ordinary shares of 0.0001 each 100 100 100 100,000 Deferred shares of 1.00 each 100 100 100 200 200 200 Allotted, called up and fully paid: 2012 31 December No'000 '000 No'000 '000 No'000 '000 Ordinary shares at 1 January ( 0.0001) 376,492 107 376,492 107 376,492 107 Issued in the year 155,556 15 - - - - Transfer to share premium - (69) - - - - Ordinary shares c/f 532,048 53 376,492 107 376,492 107 Deferred shares of 1.00 each 100 100 100 100 100 100 532,148 153 376,592 207 376,592 207 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. During the period the Group issued 155,555,555 ordinary shares with a nominal value of 15,556 which were subscribed for at a price of 18 pence per share. The gross consideration for this subscription was 28million. The issue of 111,111,111 shares was a result of the placing of Ordinary shares by Singer Capital Markets (the Placing ), which raised gross funds of 20million. The Directors intend that the net proceeds will be used to fund growth opportunities and in particular to finance complementary acquisitions in the Business Information market. As part of the banking agreement with The Royal Bank of Scotland, 4million of the funds were used to repay borrowings. Simultaneously with the Placing, the Chairman Michael Danson, entered into a capitalisation agreement to convert 8million of a non-interest bearing loan of 9,768,871 into 44,444,444 ordinary shares at the Placing price of 18 pence per share. Following the Placing and the Capitalisation, Michael Danson s shareholding in the Group is 67.72% (31 December : 83.89%) 16
Notes to the interim financial statements (continued) The amount recognised within share premium as a result of the Placing and Capitalisation was 27.1million, which is analysed as follows; m Gross funds of the Placing 20.0 Capitalisation of loan 8.0 Commission paid to Singer Capital Markets (4%) (0.8) Legal fees associated to the Placing (0.1) Net funds 27.1 7. Borrowings Current 2012 31 December 000s 000s 000s Bank overdraft - 4,621 1,290 Loans due within one year 3,500 8,732 3,517 Non-current 3,500 13,353 4,807 Long-term loans 6,226 9,769 19,936 Outstanding loans consist of one loan provided by Michael Danson as well as two facilities provided by The Royal Bank of Scotland, which were issued in. Of The Royal Bank of Scotland loans, 1.5million is due for repayment within the year. Current The Group currently has a 3 million overdraft facility, which was not drawn down upon at 2012. Interest is charged on the overdraft at 2.5% over the London Interbank Offered Rate. A 9 million loan was provided by Michael Danson to fund the acquisition of Canadean. The loan has an interest rate of 275 basis points over the 3-month London Interbank Offered Rate, in line with the current rate on Progressive s term loan with the Royal Bank of Scotland. This loan has 2.0 million outstanding as at 2012. Non-current 12 million loan provided by The Royal Bank of Scotland In October, 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. As part of the Placing (discussed in note 6) 4million of the term loan was repaid to The Royal Bank of Scotland, pursuant to the banking agreement. As at 2012, 2 million of the term loan and 6 million revolving capital facility were outstanding. 1.5million of the term loan is due for repayment in October 2012 and as such has been classified as a short term liability. Also, as part of the Placing (discussed in note 6); Michael Danson converted 8million of his 9.8million interest free loan into equity. The remaining 1.8million was used to offset an amount owed by World Market Intelligence, a company wholly owned by Michael Danson. 17
Notes to the interim financial statements (continued) 8. Acquisition The assets of Kable, a division of Guardian News & Media Limited, were acquired on 2 July 2012. Kable is one of the UK s leading providers of technology expenditure intelligence providing business information, tactical intelligence, research, analysis and consultancy to a number of the UK s leading blue chip companies. Kable is a strategic fit business, delivering subscription based business information services with a strong brand, industry leading renewal rates and good growth opportunities in adjacent markets. The initial accounting for the acquisition has not been finalised hence an estimate of the financial effect of the transaction cannot yet be made. 9. Related party transactions Michael Danson, Progressive Digital Media Group s Chairman, owns 67.72% of the Company s ordinary shares as at 30 June 2012. Michael Danson owns a number of businesses that interact with Progressive Digital Media Group. The principal transactions are as follows: Accommodation Following the sale of the freehold property, Progressive Digital Media Group entered into a property 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 6 months to 2012 was 842,817 net of a recharge of 283,983 to the other companies occupying the buildings (: 949,969 net of a recharge of 201,940). 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 6 months to 2012 was 749,800 (: 630,928). Revenue License Agreement During the previous year, Progressive Digital Media Group 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 2012 is 0.4 million. Loans Michael Danson has provided loans to the Group during the periods presented. A 9.8 million loan issued in 2009 and repayable by 2019. During the period, 8.0 million was converted into 44,444,444 ordinary shares at the Placing price of 18 pence per share. The remaining 1.8million was used to repay a debt owed by World Market Intelligence Ltd, a company wholly owned by Michael Danson. The loan carried no interest. A 9 million loan for the Canadean acquisition, repayable by 2013, or earlier subject to Board approval. 2 million is outstanding as at 2012. This loan accrues interest at a rate of 275 basis points over the 3 month London Interbank Offered Rate, in line with the current rate on Progressive s term loan with the Royal Bank of Scotland. 18
Notes to the interim financial statements (continued) 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, excluding the loans from Michael Danson, were: 2012 31 December 000 000 000 Global Data Ltd (69) (152) (11) World Marketing Intelligence Ltd 4,477 3,200 4,515 New Statesman Ltd 2,114 1,685 1,916 Estel Investments Ltd - (4) 3 Estel Investments No. 2 Ltd 291 290 290 Estel Investments No. 3 Ltd (753) (249) (596) Progressive Media International Ltd 410 415 404 Estel Property Investments Ltd (4,630) (3,176) (4,652) Elite Ltd 428 97 314 Spears Ltd 204 138 184 Progressive Customer Publishing Ltd 145-4 Progressive Media Publishing Ltd 2 2 - Progressive Innovations Ltd (3) - - Progressive Media UK Ltd 76 - - The company has right of set off over these amounts. 2,692 2,246 2,371
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 Singer Capital Markets Limited One Hanover Street London W1S 1YZ 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 Bankers The Royal Bank of Scotland plc 280 Bishopsgate London EC2M 4RB Registered number Company No. 3925319