Final Results

RNS Number : 1715G

Progressive Digital Media Group PLC

02 March 2015

2 March 2015

For release

Progressive Digital Media Group Plc

Final Results For The Year Ended 31 December 2014

Highlights

Recent acquisitions performing well, whilst adverse exchange rate movements impacted organic growth.

Key achievements in 2014

§ Revenue and earnings growth

§ Acquisition of Pyramid Research completed 1 January 2014

§ Acquisition of Current Analysis completed 30 July 2014

§ Cash and bank facilities to fund future growth

Financial performances

§ Group revenue increased by 16.2% to £63.2m (2013: £54.3m)

§ Business Intelligence revenue increased by 17.6% to £38.5m (2013: £32.7m)

§ Adjusted EBITDA⁽¹⁾ increased by 1.8% to £12.0m (2013: £11.8m)

§ Adjusted EBITDA margin⁽¹⁾ decreased to 19.0% (2013: 21.7%)

§ Reported EBITDA⁽²⁾ reduced by 62.0% to £3.8m (2013: £9.9m)

§ Reported profit before tax from continuing operations of £0.3m (2013: £7.3m) inclusive of £2.6m restructuring costs and £4.4m share based payments charge

§ Group loss for the year of £2.2m, which includes tax and loss from discontinued operations

§ Deferred Revenue increased by 50.3% to £21.5m (2013: £14.3m)

§ Net (debt)/ cash⁽³⁾ of (£8.7m) (2013: net cash of £8.3m)

Our business

· Premium business information services

· A strong and scalable asset base

· Significant contracted and visible revenue streams

· Globally exploitable business model

Simon Pyper, Chief Executive of Progressive Digital Media Group Plc, commented:

"We have during 2014 made good progress towards achieving our objective of building an authoritative presence in the Global Consumer and ICT business information markets. Additionally, we have over the past year continued to invest in our content sets and delivery platforms and as we start the new financial year we are better placed than ever to serve our growing blue chip customer base on a local, regional and global basis."

Note 1: Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, exchange rate losses, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions, integration and restructure of the Group. Adjusted EBITDA margin is defined as; Adjusted EBITDA as a percentage of revenue.

Note 2: EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a non-cash charge of £4.4 million for share based payments (2013: £1.1 million).

Note 3: Net (debt)/ cash: Cash and cash equivalents less short and long-term borrowings.

Enquiries:

Progressive Digital Media Group Plc	0207 936 6400
Mike Danson, Chairman
Simon Pyper, Chief Executive

N+1 Singer	0207 496 3000
James Maxwell
Alex Wright

Hudson Sandler	0207 796 4133
Michael Sandler

CHAIRMAN'S STATEMENT

I am pleased to report results that show good revenue and earnings growth, with revenues tempered by adverse exchange rates. We have, during 2014, made progress towards achieving our key strategic objective of becoming a leading provider of premium business information to the Global Consumer and ICT markets. In 2014 we completed three acquisitions; one small "bolt-on" for our Consumer proposition and two more substantial acquisitions which address the ICT market. Additionally, we continued to re-engineer the business and its processes, investing heavily in content sets and delivery platforms which better serve the needs of our growing blue chip customer base.

Our business model

We produce premium business information for the Global Consumer and ICT markets. We supply our customers with research, analysis and tactical intelligence across a multiple of platforms, which enables our customers to gain a competitive advantage in their markets. We have a simple business model, which is designed to generate revenues off a relatively fixed operating cost base allowing for operational gearing to drive profit growth and margin. Its key features are:

1. Strong asset base with scalable business model - premium intelligence and customer datasets

2. Global coverage of consumer and technology information markets

3. Focus on subscription and contracted revenues - high quality recurring income, with high barriers to entry and pricing power

Our employees

We work in a dynamic global market, with customer needs ever changing and where success both today and in the future is entirely dependent upon the professionalism, commitment and hard work of our employees. On behalf of the Board I would like to thank our employees for their contribution and to welcome those new employees who have joined the Group from our recent acquisitions.

Current trading and outlook

We expect 2015 to be another year of progress, as we seek to leverage our recent acquisitions and continue to invest in our content and delivery platforms.

Mike Danson

Chairman

2 March 2015

CHIEF EXECUTIVE'S REVIEW

We have during 2014 made good progress towards achieving our objective of building an authoritative presence in the Global Consumer and ICT business information markets. Additionally, we have over the past year continued to invest in our content sets and delivery platforms and as we start the new financial year we are better placed than ever to serve our growing blue chip customer base on a local, regional and global basis.

Operational review

Group performance

Group revenues grew by 16.2% to £63.2m.

Business Intelligence revenues grew by 17.6% and now account for 61.0% of total revenues (2013: 60.3%). Over the medium term our goal is to increase Business Intelligence revenues to 75.0% of total Group revenues. Eliminating the benefit of our recent acquisitions underlying revenues grew by 4.8% which reflects the higher mix of non-sterling denominated revenues.

Events and Marketing revenues grew by 14.1% to £24.6m and now account for 39.0% of total revenues (2013: 39.7%). The majority of revenues in this area are denominated in sterling and thus not subject to exchange rate movements.

Adjusted EBITDA grew by just under 2% to £12.0m (2013: £11.8m) whilst Adjusted EBITDA margin decreased by 2.7% to 19.0% (2013: 21.7%). Margins were adversely impacted by both the part-year effect of our recent acquisitions and the effect of exchange rates and in particular the strength of sterling against both the US dollar and Euro from which the majority of Group revenues derive.

Profit before tax from continuing operations decreased by £7.0m to £0.3m (2013: £7.3m), which is after a £4.4m (2013: £1.1m) non-cash charge for share based payments reflecting the award of additional share options under the long term inventive plan for senior management and the significant increase in share price since the scheme was first introduced in January 2011. Profit before tax also includes £2.6m of largely acquisition related restructuring costs.

Loss for the year of £2.2m (2013: profit of £4.5m) is net of tax and losses associated with discontinued operations.

Acquisitions

We completed three acquisitions during 2014, one "bolt-on" acquisition addressing the Consumer market and two complementary acquisitions which address the ICT market.

Pyramid Research and Current Analysis are two well-regarded and complementary businesses which provide practical market intelligence to leading professionals in the ICT sector. Pyramid Research focuses on market and service opportunities, whilst Current Analysis is focused on innovation and on how companies in the ICT space can better compete. Both companies satisfy all of our acquisition criteria, providing subscription based business information services to blue chip companies operating in a global sector.

Common Systems

The Group has a number of common systems and processes from sales management, to content production and client delivery. We seek to constantly improve these systems and processes in order to drive improved efficiencies and operating margins. Moreover, these common systems and processes ease expansion into new geographies and reduce integration risk.

Looking ahead

We are a focused business with one clear goal: to become a leading provider of premium business information to the Global Consumer and ICT markets. Last year was a step in the right direction; this year should prove to be another as we build on the solid foundation we have established.

The key objectives for the forthcoming year are:

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

· Expand our sales footprint in high-growth Consumer and ICT markets

· Integration, investment and growth from our recent acquisitions

We are an ambitious and growing company; that we have achieved so much in such a relatively short period of time is testament to the passion, commitment and contribution of our employees.

Simon Pyper

Chief Executive

2 March 2015

FINANCIAL REVIEW

Financially the Group has performed well with improved revenues and earnings at an Adjusted level.

Financial highlights

· Increased the Group's revenue by 16.2% year on year

· Increased profitability at the Adjusted EBITDA level by 1.8%

· Deferred revenue increased by £7.2m to £21.5m (2013: £14.3m) as a result of acquisitions in the year combined with strong sales towards the end of 2014

The increased share based payments charge of £4.4m (2013: £1.1m) is largely related to additional options granted to existing scheme members, new hires and employees joining the Group via acquisitions.

	2014	2013	Movement
Continuing operations	£000s	£000s

Revenue	63,161	54,342	16.2%

Profit before tax	294	7,283
Depreciation	547	562
Amortisation	2,425	1,725
Finance costs	484	311
EBITDA¹	3,750	9,881	(62.0%)
Restructuring costs	2,237	392
Property related provisions	(221)	(222)
Revaluation of short and long-term derivatives	15	(24)
Share based payments charge	4,371	1,127
Exceptional property costs	13	93
Unrealised foreign exchange loss	787	-
M&A costs	431	45
Deal costs	146	154
Exceptional legal costs	-	141
Exchange rate losses	498	231
Adjusted EBITDA²	12,027	11,818	1.8%
Adjusted EBITDA margin²	19.0%	21.7%

Note 1: EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a non-cash charge of £4.4 million for share based payments (2013: £1.1 million).

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

Earnings per share

Basic loss per share from continuing operations was (0.78) pence per share (2013: earnings of 6.90 pence per share).

FINANCIAL REVIEW

Cash flow

The Group generated £12.0 million of Adjusted EBITDA in 2014, which excludes £0.3 million paid in relation to onerous leases. Working capital movements reduced the cash generated from continuing operations to an inflow of £3.1 million.

Trade and other receivables were significantly higher than the previous year at £33.0 million (2013: £24.9 million), reflecting the balance sheet impact of the acquisitions made during the year combined with strong sales towards the end of 2014 in line with expectations. Banking facilities were renegotiated with The Royal Bank of Scotland in the year, resulting in a cash inflow of £10.0 million which was used to partially fund the acquisition of Current Analysis Inc.

Capital expenditure (excluding balances in relation to acquisitions) was £2.3 million in 2014 (£0.4 million in 2013). This included £1.1 million on software (£0.1 million in 2013).

Currency rate risk

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

Liquidity risk and going concern

The Group's approach to managing liquidity risk is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities as they fall due with surplus facilities to cope with any unexpected variances in timing of cash flows. The Group meets its day-to-day working capital requirements through free cash flow. The Group has an overdraft facility of £2 million, which was not utilised as at 31 December 2014 and management do not forecast utilisation of this facility in the next 18 months.

Based on cash flow projections, the Group considers 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 annual report and financial statements on a going concern basis.

Simon Pyper

Chief Executive

2 March 2015

Consolidated Income Statement

	Notes	Year ended 31 December 2014	Year ended 31 December 2013
		£000s	£000s
Continuing operations
Revenue	3	63,161	54,342
Cost of sales		(39,294)	(31,657)
Gross profit		23,867	22,685
Distribution costs		(792)	(878)
Administrative costs		(12,991)	(11,744)
Other expenses	4	(9,306)	(2,469)
Operating profit		778	7,594

Analysed as:
Adjusted EBITDA¹		12,027	11,818
Items associated with acquisitions and restructure of the Group	4	(2,606)	(603)
Exchange rate losses		(498)	(231)
Other adjusting items	4	(5,173)	(1,103)
EBITDA²		3,750	9,881
Amortisation		(2,425)	(1,725)
Depreciation		(547)	(562)
Operating profit		778	7,594

Finance costs		(484)	(311)
Profit before tax from continuing operations		294	7,283
Income tax expense		(887)	(2,146)
(Loss)/ profit for the year from continuing operations		(593)	5,137
Loss for the year from discontinued operations	9	(1,628)	(633)
(Loss)/ profit for the year		(2,221)	4,504

Attributable to:
Equity holders of the parent		(2,106)	4,487
Non-controlling interest		(115)	17

(Loss)/ earnings per share attributable to equity holders from continuing operations:	5
Basic (loss)/ earnings per share (pence)		(0.78)	6.90
Diluted (loss)/ earnings per share (pence)		(0.70)	6.48
Loss per share attributable to equity holders from discontinued operations:
Basic loss per share (pence)		(1.99)	(0.87)
Diluted loss per share (pence)		(1.79)	(0.82)
Total basic (loss)/ earnings per share (pence)		(2.77)	6.02
Total diluted (loss)/ earnings per share (pence)		(2.50)	5.66

1 We define Adjusted EBITDA as EBITDA adjusted for costs associated with acquisition, integration, restructure of the Group, share based payments, impairment, exchange rate losses and impact of foreign exchange contracts. See note 4 of the preliminary financial statements for details. 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.

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

Consolidated Statement of Comprehensive Income


	Year ended 31 December 2014	Year ended 31 December 2013
	£000s	£000s
(Loss)/ profit for the year	(2,221)	4,504
Other comprehensive income
Items that will be classified subsequently to profit or loss:
Translation of foreign entities	(166)	15
Other comprehensive (loss)/ income, net of tax	(166)	15
Total comprehensive (loss)/ income for the year	(2,387)	4,519
Attributable to:
Equity holders of the parent	(2,272)	4,502
Non-controlling interest	(115)	17

Consolidated Statement of Financial Position


	Notes	31 December 2014	31 December 2013
		£000s	£000s
Non-current assets
Property, plant and equipment		1,510	831
Intangible assets		42,403	24,807
Deferred tax assets		457	1,490
		44,370	27,128
Current assets
Inventories		150	155
Trade and other receivables		33,049	24,877
Short-term derivative assets		106	6
Cash and cash equivalents		8,261	14,178
		41,566	39,216
Total assets		85,936	66,344
Current liabilities
Trade and other payables		(32,567)	(26,763)
Short-term borrowings	7	(1,283)	-
Current tax payable		(1,240)	(917)
Short-term derivative liabilities		(89)	-
Short-term provisions		(368)	(644)
		(35,547)	(28,324)
Non-current liabilities
Long-term provisions		(84)	(58)
Long-term derivative liabilities		(26)	-
Long-term borrowings	7	(15,651)	(5,851)
		(15,761)	(5,909)
Total liabilities		(51,308)	(34,233)
Net assets		34,628	32,111
Equity
Share capital	8	154	153
Share premium account		200	-
Other reserve		(37,128)	(37,128)
Special reserve		48,422	48,422
Foreign currency translation reserve		(126)	40
Retained profit		23,106	20,508
Equity attributable to equity holders of the parent		34,628	31,995
Non-controlling interest		-	116
Total equity		34,628	32,111

Consolidated Statement of Changes in Equity

	Share capital		Share premium account	Other reserve	Special reserve	Foreign currency translation reserve	Retained profit/ (loss)	Equity attributable to equity holders of the parent	Non-controlling interest	Total equity
	£000s		£000s	£000s	£000s	£000s	£000s	£000s	£000s	£000s
Balance at 1 January 2013		153	71,368	(37,128)	-	25	(7,942)	26,476	107	26,583
Profit for the year		-	-	-	-	-	4,487	4,487	17	4,504
Other comprehensive income:
Translation of foreign entities		-	-	-	-	15	-	15	-	15
Total comprehensive income for the year		-	-	-	-	15	4,487	4,502	17	4,519
Transactions with owners:
Transfer between reserves		-	25	-	-	-	(25)	-	-	-
Capital reduction		-	(71,393)	-	48,422	-	22,971	-	-	-
Dividends		-	-	-	-	-	-	-	(8)	(8)
Share based payments charge		-	-	-	-	-	1,127	1,127	-	1,127
Excess deferred tax on share based payments		-	-	-	-	-	(110)	(110)	-	(110)
Balance at 31 December 2013		153	-	(37,128)	48,422	40	20,508	31,995	116	32,111
Loss for the year		-	-	-	-	-	(2,106)	(2,106)	(115)	(2,221)
Other comprehensive income:
Translation of foreign entities		-	-	-	-	(166)	-	(166)	-	(166)
Total comprehensive loss for the year		-	-	-	-	(166)	(2,106)	(2,272)	(115)	(2,387)
Transactions with owners:
Issue of share capital: ERC acquisition		-	200	-	-	-	-	200	-	200
Issue of share capital: Share based payments scheme		1	-	-	-	-	(1)	-	-	-
Dividends		-	-	-	-	-	-	-	(1)	(1)
Share based payments charge		-	-	-	-	-	4,371	4,371	-	4,371
Excess deferred tax on share based payments		-	-	-	-	-	334	334	-	334
Balance at 31 December 2014		154	200	(37,128)	48,422	(126)	23,106	34,628	-	34,628

Consolidated Statement of Cash Flows

Continuing operations	Year ended 31 December 2014	Year ended 31 December 2013
Cash flows from operating activities	£000s	£000s
(Loss)/ profit for the year from continuing operations	(593)	5,137
Adjustments for:
Depreciation	547	562
Amortisation	2,425	1,725
Finance costs	484	311
Taxation recognised in profit or loss	887	2,146
Profit on disposal of subsidiary	(106)	-
Loss on disposal of property, plant and equipment	8	8
Revaluation of foreign currency loan	902	-
Share based payments charge	4,371	1,127
Increase in trade and other receivables	(5,927)	(7,544)
Decrease in inventories	5	25
Increase in trade payables	396	680
Revaluation of short and long-term derivatives	15	(24)
Movement in provisions	(299)	(642)
Cash generated from continuing operations	3,115	3,511
Interest paid (continuing operations)	(220)	(214)
Income taxes paid (continuing operations)	(1,364)	(623)
Net cash from operating activities (continuing operations)	1,531	2,674
Net decrease in cash and cash equivalents from discontinued operations	(1,281)	(114)
Total cash flows from operating activities	250	2,560
Cash flows from investing activities (continuing operations)
Acquisition of Pyramid Research	(2,006)	-
Acquisition of ERC Group	(543)	-
Acquisition of Current Analysis Inc	(11,168)	-
Proceeds from disposal of subsidiary	58	-
Purchase of property, plant and equipment	(1,212)	(213)
Purchase of intangible assets	(1,128)	(149)
Net cash used in investing activities (continuing operations)	(15,999)	(362)
Net increase/ (decrease) in cash and cash equivalents from discontinued operations	4	(24)
Total cash flows from investing activities	(15,995)	(386)
Cash flows from financing activities (continuing operations)
Repayment of short-term borrowings	-	(500)
Proceeds from long-term borrowings	10,000	-
Net cash used in financing activities (continuing operations)	10,000	(500)
Net decrease in cash and cash equivalents from discontinued operations	(6)	(8)
Total cash flows from financing activities	9,994	(508)
Net (decrease)/ increase in cash and cash equivalents	(5,751)	1,666
Cash and cash equivalents at beginning of year	14,178	12,497
Effects of currency translation on cash and cash equivalents	(166)	15
Cash and cash equivalents at end of year	8,261	14,178

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

Notes to the Condensed Consolidated Financial Statements

1. General information

Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union (EU).

The financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. These condensed financial statements are for the year ended 31 December 2014 and should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2013 that was sent to all shareholders and is available on the Company's website. These financial statements are presented in Pounds Sterling (£).

This preliminary announcement does not constitute the Group's full financial statements for the year ended 31 December 2014. The auditors have reported on the Group's statutory accounts for the year ended 31 December 2014 under s495 of the Companies Act 2006, which do not contain statements under s498(2) or s498(3) of the Companies Act 2006 and are unqualified. The statutory accounts for the year ended 31 December 2014 will be filed with the Registrar of companies in due course.

Critical accounting estimates and judgements

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

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

Valuation of acquired intangibles

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

Provisions for bad debt

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

Share based payments

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

Carrying value of goodwill and other intangibles

The carrying value of goodwill and other intangibles is assessed at least annually to ensure that there is no need for impairment. Performing this assessment requires management to estimate future cash flows to be generated by the related cash generating unit, which entails making judgements including the expected rate of growth of sales, margins expected to be achieved, the level of future capital expenditure required to support these outcomes and the appropriate discount rate to apply when valuing future cash flows.

Going concern

The Group meets its day-to-day working capital requirements through free cash flow. The Group has an overdraft facility of £2 million, which was not utilised as at 31 December 2014 and management do not forecast utilisation of this facility in the next 18 months.

2. Accounting policies

This report has been prepared based on the accounting policies detailed in the Group's financial statements for the year ended 31 December 2014.

3. Segmental analysis

The principal activity of Progressive Digital Media Group Plc (PDMG) and its subsidiaries ('the Group') is the provision of premium business information through multiple channels. The Group supplies its customers with research, analysis and tactical intelligence enabling them to gain a competitive advantage in their markets.

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 executive directors as its chief operating decision maker.

Business information is provided to customers through multiple channels by a dedicated content team that is centrally managed by research directors who report directly to the executive directors. Business information is therefore considered to be the operating segment of the Group.

The Group profit or loss is reported to the executive directors on a monthly basis and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items. The executive directors also monitor revenue within the operating segment and have decided to include an additional voluntary disclosure analysing revenue by sub-category, being Business Intelligence and Events and Marketing.

A reconciliation of Adjusted EBITDA to profit before tax from continuing operations is set out below:

	Year ended 31 December 2014	Year ended 31 December 2013
	£000s	£000s
Business Intelligence	38,513	32,742
Events and Marketing	24,648	21,600
Total Revenue	63,161	54,342

Adjusted EBITDA	12,027	11,818
Foreign exchange losses	(498)	(231)
Other expenses (see note 4)	(9,306)	(2,469)
Depreciation	(547)	(562)
Amortisation (excluding amortisation of acquired intangible assets)	(898)	(962)
Finance costs	(484)	(311)
Profit before tax from continuing operations	294	7,283

Geographical analysis

From continuing operations

Year ended 31 December 2014	UK	Europe	North America	Rest of World	Total
	£000s	£000s	£000s	£000s	£000s
Revenue from external customers	17,906	22,447	15,640	7,168	63,161

Year ended 31 December 2013	UK	Europe	North America	Rest of World	Total
	£000s	£000s	£000s	£000s	£000s
Revenue from external customers	16,543	20,157	11,961	5,681	54,342

4. Other expenses

	Year ended 31 December 2014	Year ended 31 December 2013
	£000s	£000s
Restructuring costs	2,237	392
Property related provisions	(221)	(222)
Exceptional property costs	13	93
Exceptional legal costs	-	141
Deal costs	146	154
M&A costs	431	45
Items associated with acquisitions and restructure of the Group	2,606	603
Share based payments charge	4,371	1,127
Revaluation of short and long-term derivatives	15	(24)
Unrealised foreign exchange loss	787	-
Amortisation of acquired intangibles	1,527	763
Total other expenses	9,306	2,469

· Restructuring costs relates to redundancies and other restructuring, largely in relation to the integration of acquisitions made during the year. Redundancies were announced prior to 31 December 2014.

· Property related provisions relate to the consolidated income statement impact of the provision made for onerous property leases and dilapidations.

· Exceptional property costs relate to additional costs incurred on properties that are not occupied and are provided for within the onerous property lease provision.

· Deal costs represent costs incurred in respect of the refinancing of loans issued by the Royal Bank of Scotland in 2014 (see note 7).

· The M&A costs relate to due diligence and corporate finance activity during the year.

· The share based payments charge relates to the share option plan (see note 6).

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

· Unrealised foreign exchange loss relates to the retranslation of short and long-term loan and trade receivable amounts denominated in foreign currency which were held at 31 December 2014.

5. 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 year. The Group 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:

	Year ended 31 December 2014	Year ended 31 December 2013
	Year ended 31 December 2014	Year ended 31 December 2013
Continuing operations
Basic
(Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s)	(593)	5,137
Weighted average number of shares (000s)	75,941	74,487
Basic (loss)/ earnings per share (pence)	(0.78)	6.90
Diluted
(Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s)	(593)	5,137
Weighted average number of shares* (000s)	84,300	79,262
Diluted (loss)/ earnings per share (pence)	(0.70)	6.48
Discontinued operations
Basic
Loss for the year attributable to ordinary shareholders from discontinued operations (£000s)	(1,628)	(633)
Less minority interest (£000s)	(115)	17
Loss for the year attributable to ordinary shareholders of the parent company (£000s)	(1,513)	(650)
Weighted average number of shares (000s)	75,941	74,487
Basic loss per share (pence)	(1.99)	(0.87)
Diluted
Loss for the year attributable to ordinary shareholders of the parent company (£000s)	(1,513)	(650)
Weighted average number of shares* (000s)	84,300	79,262
Diluted loss per share (pence)	(1.79)	(0.82)
Total
Basic
(Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s)	(2,106)	4,487
Weighted average number of shares (000s)	75,941	74,487
Basic (loss)/ earnings per share (pence)	(2.77)	6.02
Diluted
(Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s)	(2,106)	4,487
Weighted average number of shares* (000s)	84,300	79,262
Diluted (loss)/ earnings per share (pence)	(2.50)	5.66

Reconciliation of basic weighted average number of shares to the diluted weighted average number of shares:

	31 December 2014 No'000s	31 December 2013 No'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	Exercise Price (Pence)	Estimated Forfeiture rate p.a.	Weighted Average of Remaining Contractual Life

Award 1	1 January 2011	£1.09	0.0714p	15%	2.5
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 of options

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	Options outstanding	Option price (pence)	Remaining life (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 December 2014	31 December 2013
	£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 December 2014	31 December 2013
	£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 (1/14^th pence)		74,487	53		-	-
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 (1/14^th 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:

	Carrying Value	Fair Value Adjustments	Fair Value
	£000s	£000s	£000s
Intangible assets consisting of:
Software	-	51	51
Brand	-	503	503
Customer relationships	-	420	420

Net assets acquired consisting of:
Tangible fixed assets	24	-	24
Accounts receivable	643	(184)	459
Trade and other payables	(163)	(64)	(227)
Deferred revenue	(457)	-	(457)
Fair value of net assets acquired	47	726	773

Cash consideration			2,006
Less net assets acquired			(773)
Goodwill			1,233

Pyramid Research has generated revenues of £2.4m and a contribution loss of £0.4m in the year ended 31 December 2014.

The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon the integration of Pyramid Research into Progressive Digital Media Group.

The Group incurred legal and professional costs of £105,000 in relation to the acquisition, which were recognised in other expenses (note 4).

ERC

On 28 March 2014, the Group acquired ERC Group Limited and its subsidiaries ('ERC') for total consideration of £804,000. The consideration comprised of £604,000 in cash consideration and £200,000 in equity. The equity issued was 76,191 ordinary shares in PDMG at a price of £2.625 (which rank pari passu with the existing PDMG ordinary shares in issue). ERC is a provider of business information and market analysis for the Consumer market. ERC has a well regarded brand name and a dedicated client base which will be used as a solid base for growth.

The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:

	Carrying Value	Fair Value Adjustments	Fair Value
	£000s	£000s	£000s
Intangible assets consisting of:
Intellectual property	-	485	485
Customer relationships	-	101	101
Deferred tax liability upon creation of intangible assets	-	(117)	(117)

Net assets acquired	-	-	-
Fair value of net assets acquired	-	469	469

Total consideration			804
Less net assets acquired			(469)
Goodwill			335

In line with the provisions of IFRS 3, further fair value adjustments may be required within the 12 month period from the date of acquisition. Any fair value adjustments will result in an adjustment to the goodwill balance reported above.

In 2013 ERC had revenues of £0.4m and profits before tax of £nil. ERC has generated revenues of £0.3m and a contribution of £0.1m in the period from acquisition to 31 December 2014. If the acquisition had occurred on 1 January 2014, the Group year to date revenue for 2014 would have been £63.2m and the Group profit before tax from continuing operations would have been £0.3m.

The Group incurred legal and professional costs of £16,000 in relation to the acquisition, which were recognised in other expenses (note 4).

The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon the integration of ERC into Progressive Digital Media Group.

The total cash cost of the acquisition is reconciled as follows:

			£000s
Cash consideration			604
Cash acquired as part of opening balance sheet			(165)
Cash returned to seller representing net assets as at completion date			104
Total cash cost			543

Current Analysis

On 30 July 2014, the Group acquired Current Analysis Inc and its subsidiaries ('Current Analysis') for cash consideration of US$19,600,000 (£11,529,412). Current Analysis is an established and well regarded business which provides subscription based business intelligence services to the ICT industry. The acquisition supports the Group's strategy of expanding its premium subscription based services into global markets.

The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:

	Carrying Value	Fair Value Adjustments	Fair Value
	£000s	£000s	£000s
Intangible assets consisting of:
Customer relationships	-	2,543	2,543
Brand	-	1,390	1,390
Deferred tax liability upon creation of intangible assets	-	(1,573)	(1,573)

Net liabilities acquired consisting of:
Tangible fixed assets	41	-	41
Intangible assets	257	-	257
Cash and cash equivalents	361	-	361
Trade receivables	1,340	-	1,340
Prepayments and other receivables	383	-	383
Trade and other payables	(1,116)	461	(655)
Deferred revenue	(3,701)	-	(3,701)
Short and long-term provisions	(49)	(218)	(267)
Fair value of net assets acquired	(2,484)	2,603	119

Total consideration			11,529
Less net assets acquired			(119)
Goodwill			11,410

In 2013 Current Analysis had revenues of US$13.3m and profits before tax of US$0.2m. Current Analysis has generated revenues of £3.6m and a contribution of £1.2m in the period from acquisition to 31 December 2014. If the acquisition had occurred on 1 January 2014, the Group year to date revenue for 2014 would have been £67.6m and the Group loss before tax from continuing operations would have been £0.6m.

The Group incurred legal and professional costs of £286,000 in relation to the acquisition, which were recognised in other expenses (note 4).

The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon the integration of Current Analysis into Progressive Digital Media Group, the highly skilled assembled workforce and penetration into the valuable US ICT business information sector.

As part of the acquisition of Current Analysis, US$2million of the purchase consideration was transferred to an Escrow account to cover unpaid historic US sales tax. A claim will be made against the Escrow monies to extinguish the liability once the exact value is agreed with the relevant tax authorities. The liability is estimated to be no more than US$1.85m.

The total cash cost of the acquisition is reconciled as follows: