Interim Results

29th Jan 2010 07:00



29 January 2010

Progressive Digital Media Group Plc

Unaudited Interim Report For The Six Months Ended 31 October 2009

Progressive Digital Media Group Plc ("the Group") has released its results for the interim six-month period ended 31 October 2009. These results exclude the first four months and the last two months of 2009, which are historically the most profitable periods in the Group's calendar. 

The Group is a content based, digital media business providing specialised, integrated digital solutions to a range of business and professional communities. 

Highlights

Key achievements in the six months

	Significant progress has been made with the integration of the businesses of Progressive Digital Media limited and TMN
	Ongoing investment to expand our sales headcount to deliver revenue growth in 2010
	Investment in content and delivery platforms, and the introduction of common sales, product and back office processes
	Consequently, the Group is well placed to deliver revenue and cost synergies

Financial performance

	Group revenues £18.342m (2008: £5.730m)
	Adjusted EBITDA(1) £(0.418)m (2008: £(1.250)m)
	EBITDA £(0.925)m (2008: £(1.250)m)
	Loss before tax £(2.791)m (2008: £(1.598)m)
	On a calendar year basis for 2009 the Group has trading profitably (EBITDA) and recorded revenue growth
	Because of accounting requirements, the comparative results exclude SPG and TMN. The comparative results have never previously been released

Our business

	Is focused on high growth digital media sectors
	Is focused on providing high-value, must have digital content
	Is global in coverage and delivery
	Is in the investment phase of its growth strategy
	Has clear growth opportunities and an experienced management team

Simon Pyper, CEO of Progressive Digital Media Group plc, commented: 

"Our investment and integration plans are progressing ahead of schedule. Whilst much has been achieved, we must continue our investment in headcount, content and delivery platforms if the Group is to realise its full potential. The Board is pleased with the progress made to date and is confident of the long-term prospects of the Group."

Note 1: Earnings Before Interest Tax Depreciation and Amortisation, adjusted for costs associated with the integration and restructure of the Group.

  Enquiries:

Progressive Digital Media Group plc	0207 936 6400
Mike Danson, Chairman
Simon Pyper, CEO
Ken Appiah, Finance Director
Investec Investment Banking, NOMAD and Broker	0207 597 4000
Erik Anderson / David Flin
Hudson Sandler	0207 796 4133
Nick Lyon

  1. Business Review

Introduction

Progressive Digital Media Group

Progressive Digital Media Group plc (the "Business" or the "Group") is a content based, digital media business providing specialised, integrated digital solutions to a range of business and professional communities. 

The Group was formed in June 2009 through the reverse acquisition of TMN Group plc ("TMN") by Progressive Digital Media Limited ("PDM") and operates as two divisions, Progressive Media Group and TMN Group. Headquartered in London, with offices across the UK, US, India and Australia, the Group serves a worldwide customer base with high quality and progressive solutions. 

History of Progressive Digital Media Group

August 2007 -	Media assets purchased from Wilmington Plc and renamed Progressive Media Group
July 2008 -	Purchase of Business Review from Datamonitor plc
November 2008 -	SPG Media Group plc ("SPG") purchased and delisted
June 2009 -	Design and construction titles sold
June 2009 -	Reverse acquisition of TMN completed. TMN Group plc changes its name to Progressive Digital Media Group plc

  CEO's statement

We are pleased to announce our results for the six months to 31 October 2009, which are the first set of published results for the new enlarged Group. Since formation, the Board has focused on the integration and restructuring of the new Group. Both of these activities are progressing ahead of schedule, and the business is well placed to deliver on its strategy to grow profitable revenues. Our core aims are to:

1.	Increase traffic to our digital products
2.	Increase yields and repeat business
3.	To leverage new and existing products across multiple platforms
4.	To leverage new and existing products into new high growth markets

The Board is pleased with the progress made to date and are confident of the long-term prospects of the Group.

Group performance

Whilst the Group was formed via the acquisition of PDM by TMN, accounting standards deem PDM to be the acquiring company. Consequently the interim results for 2009 include six months results for PDM and four months results for TMN (from the acquisition date of 25 June 2009). Furthermore, the six month comparative results (six months to 31 October 2008) consist of PDM's results and exclude the results for both TMN and SPG as these groups were acquired after 31 October 2008.

As these are our interim results, they exclude the first four months and last two months results for 2009, which are historically the most profitable trading periods for the Group. Moreover, these results do not fully reflect the benefit of the investments, which we have made in our content, our product and in our sales platforms. Furthermore, the synergy benefits which are expected as a result of the integrating and restructuring of the various businesses are likely to start to benefit our income statement towards the end of 2010 into 2011. 

The results for the period include £0.5 million of costs associated with the integration and restructuring of the Group.

Despite the reported loss from continuing operations, on a calendar year basis for 2009 the Group has traded profitably (EBITDA) and recorded revenue growth.

The results exclude the results from the design and construction titles that were acquired by PDM in August 2007. These titles were disposed of in June 2009 prior to the reverse acquisition and have been presented as a discontinued operation.

  Financial highlights

	6 months to 31 October 2009	6 months to 31 October 2008	Movement
Continuing operations	£000s	£000s
Revenue	18,342	5,730	220%
EBITDA adjusted - 1	(418)	(1,250)	67%
EBITDA - 2	(925)	(1,250)	26%
Loss before tax adjusted - 3	(901)	(1,334)	32%
Loss before tax	(2,791)	(1,598)	(75%)

1	Earnings before interest, tax, depreciation and amortisation, adjusted for costs associated with acquisitions, integration and restructure of the Group. See note 4 of the interim financial statements for details.
2	Earnings before interest, tax, depreciation and amortisation.
3	Loss before tax, adjusted for costs associated with acquisitions, integration and restructure of the Group (including amortisation of intangible assets recognised upon acquisition).

Financial review of operations

Progressive Media Group ("Progressive")

PDM formed Progressive after the purchase of media assets from Wilmington plc and it has acquired, invested and managed assets that operate in markets that demonstrate significant growth potential. Progressive purchased Business Review from Datamonitor plc, and acquired SPG in November 2008. Progressive is predominately focused on the B2B space, providing content rich solutions in web-portals and subscription based information products

Revenues for the six month period were £14.1 million (2008: £5.7 million). 

TMN

TMN is one of the UK's leading online digital marketing organisations, operating through a number of key channels: affiliate marketing, email marketing and online research. 

In line with industry norms and the Group's accounting policies, the revenues for affiliate marketing and other agency transactions are recorded net, at the amount equal to the gross profit. This is a change when compared to TMN's accounting policies and for the four month period this accounting policy change has reduced recorded revenues by £5.2 million. 

Revenues for the four month period since acquisition were £4.2 million (2008: Nil).

  Financial review

The Group's statement of financial position at 31 October 2009 details our short-term borrowings, which reflects the Group's overdraft and revolving credit facility. 

At the time of the reverse takeover the Progressive business had no short-term borrowings. However, facilities were required to settle TMN's overdraft of £3.9 million and reduce its significant trade and other payables (£6.5 million). Accordingly, short-term borrowings for the Group as at 31 October 2009 were £4.8 million (2008: nil).

The Group has £9.8 million (2008: £16.4 million) of long-term borrowings in the form of loan notes.

Change in financial reporting period

The first four months and last two months of the calendar year are significant trading periods for the Group. However, the results for these periods are excluded from these results as a consequence of adopting TMN's reporting calendar. In order to more accurately present the trading performance, the Group has changed its financial year-end to December. Consequently the Group will publish its preliminary results for the full year ended 31 December 2009 in March.

Outlook and prospects

We are confident that the investments we are making in our product, in our delivery and sales platforms, coupled with our focus on delivering both synergies and cost efficiencies mean that we are well placed to deliver upon our strategy, to profitably grow revenues.

Principal risks and uncertainties

Management consider that the principal risks and uncertainties facing the Group are:

	Acquisitions may not be successfully integrated into the Group due to operational hurdles, loss of key personnel or due to IT technical problems. If this occurs then the Group may not achieve the forecast benefit from acquisitions.
	The business is largely based in the UK and significant revenue is from advertising. This means that the Group is impacted by downturns in the economy that affect its clients.
	The Group may fail to respond to changes in the competitive landscape and may not establish marketing and product initiatives to ensure it remains competitive. Continuing the investment in products in the future will be imperative if the Group is to achieve and maintain profitability.
	The Group is reliant on its sales force and critical to its success is the recruitment and retention of skilled sales personnel.

Responsibility statement

This Interim Report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in an interim financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

The condensed set of financial statements has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU. Amounts due to and from related parties are disclosed in note 9.  2. Auditor's Report

Independent review report to Progressive Digital Media Group Plc

Introduction

We have been engaged by the company to review the financial information in the interim report for the six months ended 31 October 2009 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, the consolidated statement of cash flows and the related explanatory notes. We have read the other information in the Business Review contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

This report is made solely to the company in accordance with guidance contained in ISRE (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 those matters we are required to state to them in a 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, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the AIM rules of London Stock Exchange.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The interim financial statements included in this interim 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 to the Group a conclusion on the financial information in the interim 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' issued by the Auditing Practices Board for use in the United Kingdom. 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 interim set of financial statements in the interim financial report for the six months ended 31 October 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM rules of the London Stock Exchange.

Grant Thornton UK LLP

AuditorLondon

28 January 2010

  3. Interim Financial Statements 

Consolidated income statement (unaudited)

			RESTATED	RESTATED
	Notes	6 months to 31 October 2009	6 months to 31 October 2008	Year to 30 April 2009
		£000s	£000s	£000s
Continuing operations
Revenue	3	18,342	5,730	21,680
Cost of sales		(8,920)	(1,680)	(3,759)
Gross profit		9,422	4,050	17,921
Distribution costs		(454)	(420)	(982)
Administrative costs		(9,706)	(4,964)	(18,169)
Other expenses	4	(1,890)	(264)	(2,860)
Operating loss		(2,628)	(1,598)	(4,090)
Other income		-	-	35
Finance costs		(163)	-	-
Loss before tax		(2,791)	(1,598)	(4,055)
Income tax credit		649	425	1,201
Loss for the period from continuing operations		(2,142)	(1,173)	(2,854)
Profit for the period from discontinued operation	10	4,835	712	728
Profit/(loss) for the period		2,693	(461)	(2,126)
Attributable to:
Equity holders of the parent		2,675	(476)	(2,135)
Minority interest		18	15	9
Basic and diluted earnings/(loss) per share attributable to equity holders:
Continuing operations (pence)	6	(0.62)	(0.41)	(0.98)
Discontinued operation (pence)	6	1.40	0.24	0.25
Basic earnings/(loss) per share (pence)	6	0.77	(0.16)	(0.73)

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

  Consolidated statement of comprehensive income (unaudited)

		RESTATED	RESTATED
	6 months to 31 October 2009	6 months to 31 October 2008	Year to 30 April 2009
	£000s	£000s	£000s
Profit/(loss) for the period	2,693	(461)	(2,126)
Other comprehensive income/(loss)
Available-for-sale financial assets
Current year gains/(losses)	860	(872)	(1,093)
Reclassification to income statement	233	-	-
Actuarial gains/(losses) on defined benefit pension plans	67	(686)	(378)
Income tax relating to components of other comprehensive income/(loss)	(325)	436	412
Other comprehensive income/(loss), net of tax	835	(1,122)	(1,059)
Total comprehensive income/(loss) for the period	3,528	(1,583)	(3,185)
Attributable to
Equity holders of the parent	3,510	(1,598)	(3,194)
Minority interest	18	15	9

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

  Consolidated statement of financial position (unaudited)

			RESTATED	RESTATED
	Notes	31 October 2009	31 October 2008	30 April 2009
		£000s	£000s	£000s
Non-current assets
Property, plant and equipment		1,300	2,466	2,581
Intangible assets	5	27,605	9,571	21,543
Deferred tax assets		1,668	244	1,299
		30,573	12,281	25,423
Current assets
Inventories		153	620	616
Current tax receivable		321	-	-
Trade and other receivables		16,086	4,150	9,981
Available-for-sale financial assets		-	2,838	2,650
Cash and cash equivalents		-	552	1,045
		16,560	8,160	14,292
Total assets		47,133	20,441	39,715
Current liabilities
Trade and other payables		(22,579)	(4,658)	(13,890)
Short-term borrowings		(4,776)	-	-
Current tax payable		-	(407)	(289)
Short-term provisions		(2,292)	-	(1,640)
		(29,647)	(5,065)	(15,819)
Non-current liabilities
Long-term borrowings	7	(9,769)	(16,410)	(24,305)
Long-term provisions		(2,472)	-	(2,526)
Deferred tax liabilities		(1,075)	(20)	-
Retirement benefit liabilities		-	(486)	(207)
		(13,316)	(16,916)	(27,038)
Total liabilities		(42,963)	(21,981)	(42,857)
Net assets/(liabilities)		4,170	(1,540)	(3,142)
Equity
Share capital		400	-	-
Share premium account		11,581	-	-
Other reserves		(8,197)	(628)	(787)
Retained earnings		327	(959)	(2,396)
Equity attributable to equity holders of the parent		4,111	(1,587)	(3,183)
Minority interest		59	47	41
Total equity		4,170	(1,540)	(3,142)

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

  Consolidated statement of changes in equity (unaudited)

RESTATED	Share capital	Share premium account	Merger reserve	Revaluation reserve	Retained earnings	Total	Minority interest	Total equity
	£000s	£000s	£000s	£000s	£000s	£000s	£000s	£000s
Balance at 1 May 2008	-	-	-	-	11	11	64	75
Profit for the period	-	-	-	-	(476)	(476)	15	(461)
Other comprehensive income/(loss):
Actuarial loss on defined benefit pension	-	-	-	-	(686)	(686)	-	(686)
Revaluation of available for sale assets	-	-	-	(872)	-	(872)	-	(872)
Deferred tax	-	-	-	244	192	436	-	436
Total comprehensive income for the period	-	-	-	(628)	(970)	(1,598)	15	(1,583)
Dividends	-	-	-	-	-	-	(32)	(32)
Balance at 31 October 2008	-	-	-	(628)	(959)	(1,587)	47	(1,540)
Profit for the period	-	-	-	-	(1,659)	(1,659)	(6)	(1,665)
Other comprehensive income/(loss):
Actuarial gain on defined benefit pension	-	-	-	-	308	308	-	308
Revaluation of available for sale assets	-	-	-	(221)	-	(221)	-	(221)
Deferred tax	-	-	-	62	(86)	(24)	-	(24)
Total comprehensive loss for the period	-	-	-	(159)	(1,437)	(1,596)	(6)	(1,602)
Balance at 30 April 2009	-	-	-	(787)	(2,396)	(3,183)	41	(3,142)
Profit for the period	-	-	-	-	2,675	2,675	18	2,693
Other comprehensive income/(loss):
Actuarial gain on defined benefit pension	-	-	-	-	67	67	-	67
Revaluation of available for sale assets	-	-	-	860	-	860	-	860
Reclassification to income statement	-	-	-	233	-	233	-	233
Deferred tax	-	-	-	(306)	(19)	(325)	-	(325)
Total comprehensive income for the period	-	-	-	787	2,723	3,510	18	3,528
Reverse acquisition	400	11,581	(8,197)	-	-	3,784	-	3,784
Balance at 31 October 2009	400	11,581	(8,197)	-	327	4,111	59	4,170

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

  Consolidated statement of cash flows (unaudited)

		RESTATED	RESTATED
	6 months to 31 October 2009	6 months to 31 October 2008	Year to 30 April 2009
	£000s	£000s	£000s
Cash flows from operating activities
Profit/(loss) after taxation	2,693	(461)	(2,126)
Adjustments for:
Depreciation	275	95	602
Amortisation	1,451	604	2,024
Other income	-	(110)	(210)
Finance expense	143	85	125
Taxation expense recognised in income statement	(620)	(148)	(918)
Decrease/(increase) in trade and other receivables	865	1,101	(983)
Decrease in inventories	210	100	104
(Decrease)/increase in trade and other payables	(482)	(1,042)	265
Gain on disposal	(4,761)	-	-
Provisions and other non-cash items	423	-	1,573
Cash generated from operations	197	224	456
Dividends paid	-	-	(32)
Interest (paid)/received	(143)	25	85
Income taxes paid	(13)	-	(10)
Net cash from operating activities	41	249	499
Cash flows from investing activities
Acquisition of SPG, net of cash acquired	-	-	(7,052)
Acquisition of TMN, net of cash acquired	(2,279)	-	-
Sale of discontinued operation, net of cash	10,641	-	-
Purchase of property, plant and equipment	(930)	(133)	(372)
Purchase of intangible assets	-	(914)	(1,243)
Purchase of available for sale financial assets	-	(3,710)	(3,742)
Net cash from investing activities	7,432	(4,757)	(12,409)
Cash flows from financing activities
Proceeds from long-term borrowings	-	3,710	11,605
Repayment of long-term borrowings	(10,794)	-	-
Net cash from financing activities	(10,794)	3,710	11,605
Net decrease in cash and cash equivalents	(3,321)	(798)	(305)
Cash and cash equivalents at beginning of period	1,045	1,350	1,350
Cash and cash equivalents at end of period	(2,276)	552	1,045

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

1. General information

Nature of operations

Progressive Digital Media Group Plc and its subsidiaries (together 'the Group') principal activities is the provision of specialised integrated digital marketing solutions. 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. The registered office of the Company is John Carpenter House, John Carpenter Street, London, EC4Y 0AN. The registered number of the Company is 3925319.

The consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company. These consolidated interim financial statements have been approved for issue by the board of directors.

The financial information for the year ended 30 April 2009 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 30 April 2009 have been filed with the Registrar of Companies. 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.

Basis of preparation

The Company issued new shares in June 2009 to acquire the share capital of Progressive Digital Media Limited (see note 8). After the acquisition Mike Danson, the owner of Progressive Digital Media Limited, owned the majority of the Company. Under IFRS the transaction is deemed to be a reverse acquisition. The assets and liabilities of Progressive Digital Media Limited have been recognised and measured at their pre-combination carrying values and the comparative results are those of Progressive Digital Media Limited and therefore the retained earnings and other reserves brought forward are those of Progressive Digital Media Limited. The cost of the acquisition was measured at the fair value of the ordinary shares that were issued to effect the reverse acquisition. The assets and liabilities of TMN Group plc have been recognised at the fair value at the acquisition date. The premium arising on the acquisition has been allocated firstly to those intangible assets identified on acquisition that are controlled by the entity and are capable of being measured reliably, and any remaining premium that cannot be allocated to separately identified intangible assets, has been allocated to goodwill. The share capital and share premium at the period end are those of the parent company. The movement in the share capital and share premium from Progressive Digital Media Limited to Progressive Digital Media Group Plc is recognised in a merger reserve.

These interim consolidated financial statements are for the six months ended 31 October 2009. 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 TMN Group plc's consolidated financial statements for the year ended 30 April 2009 and the readmission document that was sent to all shareholders.

These financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments. These consolidated interim financial statements have been prepared in accordance with the accounting policies detailed below. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated interim financial statements.

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 property provisions, valuation of acquired intangible assets, provisions for bad debt and other credit balances in the statement of financial position. 

Seasonal fluctuations

The business of the Group is subject to seasonal fluctuations as revenue is recognised upon publication or event. As a large proportion of the Group's costs are fixed and consistent throughout the year then profitability of the Group varies. The majority of profit is recognised in the first quarter of a calendar year.

Going concern

The Group meets its day-to-day working capital requirements from an overdraft facility of £7.0 million of which £4.8 million was utilised as at 31 October 2009. Subsequent to the period end trading has lowered cash reserves, however, as noted above the Group's business is highly seasonal and based on cash flow projections the Group considers the existing financing facilities to be adequate to meet short-term commitments. In addition to the existing facility Mr Danson provided the Group with a £2 million working capital loan at the time of the reverse acquisition. This loan has not yet been drawn upon. There are no covenants associated with the overdraft and no restrictions on the long-term borrowing.

2. Accounting policies

This interim report has been prepared based on the accounting policies of TMN Group plc with the exception of the application of the reverse acquisition principles noted above and revenue recognition. The revenue recognition policies of Progressive Digital Media Limited have been applied and are detailed below.

(a) Basis of consolidation

The consolidated financial statements include the accounts of the company and all of its subsidiary undertakings. Progressive Digital Media Limited, Progressive Media Group Limited and SPG Media Group Limited (formerly SPG Media Group Plc) were under the common control of Mr Danson in December 2008 at which time there was a reorganisation. SPG Media Group Plc had been acquired by Mr Danson in the month prior to the reorganisation therefore control has been deemed transitory and acquisition accounting has been applied as if Progressive Digital Media Limited acquired SPG Media Group Plc. The results of Progressive Media Group Limited have been presented as a continuing operation. The Directors believe that this represents the substance of the transaction and presents a true and fair view of the Group's operations.

As noted above the Group has applied reverse acquisition accounting in the period to reflect the acquisition of Progressive Digital Media Limited by the parent company.

	Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an enterprise taking into account any potential voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
	Intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless costs cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the Group's accounting policies.
	The results and cash flows relating to a business are included in the consolidated income statement and the consolidated cash flow statement from the date of acquisition or the date of disposal as appropriate.

 

(b) Revenue recognition

Revenue comprises amounts derived from services performed or advertisements published by the Group during the year. Print media revenue is recognised on publication, event revenue in the period in which the event is held and internet revenues on a straight-line basis over the contractual term (typically twelve months). Revenue derived from barter transactions is valued on an arms length basis. Revenue from email advertising, lead generation sources and website publishing is recognised on completion of the relevant campaign or transaction after all performance criteria have been fulfilled. Revenue arises from pay for performance actions such as clicks, leads or sales generated resulting from advertising of a merchant's products or services on customers' websites. On completion of performance criteria and any defined cancellation period, the relevant amount of commission is recognised. Revenue from the provision of online research and fieldwork services is recognised by reference to stage of completion. Stage of completion is measured by reference to the extent of services completed on a project by project basis. Revenue from hosting is recognised on a straight line basis over the term of the contract.

3. Segment analysis

The Group operates in two divisions; Progressive and TMN Group. Progressive consists of the original businesses acquired by Progressive Digital Media Limited and SPG Media Group Plc that were integrated into Progressive after acquisition. TMN Group consists of the legacy business of TMN Group Plc.

As noted in the accounting policies Progressive Digital Media is deemed to be the acquiring company under the application of reverse acquisition rules. Therefore the comparative results to the date of acquisition consist solely of Progressive. The results for the interim period include TMN Group from the date of acquisition, 25 June 2009. There is no difference between segmental revenue and Group revenue for the comparative periods.

Segment profit or loss is reported to the Board on a monthly basis and consists of earnings before interest, tax, depreciation and amortisation.

6 months to 31 October 2009

	Progressive	TMN Group	Total
	£000s	£000s	£000s
Revenue from external customers	14,139	4,203	18,342
Segment profit or (loss)	(987)	62	(925)

Reconciliation of segment result to loss before tax

		RESTATED	RESTATED
	6 months to 31 October 2009	6 months to 31 October 2008	Year to  30 April 2009
	£000s	£000s	£000s
Segment result	(925)	(1,250)	(2,161)
Depreciation	(261)	(55)	(514)
Amortisation	(1,442)	(293)	(1,415)
Other income	-	-	35
Finance costs	(163)	-	-
Loss before tax	(2,791)	(1,598)	(4,055)

The segmental results for discontinued operations are in note 10 and consist of a single segment that was sold in June 2009.

  4. Other expenses

	6 months to 31 October 2009	6 months to 31 October 2008	Year to  30 April  2009
	£000s	£000s	£000s
Redundancy	310	-	81
Property related provisions	113	-	1,537
Deal costs	84	-	-
Amortisation of acquired intangibles	1,383	264	1,242
	1,890	264	2,860

5. Additions and disposals of intangible assets

The following table shows the significant additions and disposals to intangible assets.

RESTATED	Software	Customer relationships	IP rights	Goodwill	Total intangibles
	£000s	£000s	£000s	£000s	£000s
Net book value at 1 May 2008	422	742	4,727	3,371	9,262
Additions	13	-	900	-	913
Amortisation	(115)	(165)	(324)	-	(604)
Net book value at 31 October 2008	320	577	5,303	3,371	9,571
Additions	32	-	297	-	329
Amortisation	(218)	(801)	(402)	-	(1,421)
Acquisition of SPG Media Group	58	3,812	2,473	6,721	13,064
Net book value at 30 April 2009	192	3,588	7,671	10,092	21,543
Disposal of discontinued operation	-	(163)	(2,041)	(1,247)	(3,451)
Amortisation	(67)	(981)	(402)	-	(1,450)
Acquisition of TMN Group	250	3,588	-	7,125	10,963
Net book value at 31 October 2009	375	6,032	5,228	15,970	27,605

 

6. Earnings per share

The calculation of the basic earnings per share is normally based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. As a result of the reverse acquisition the weighted average number of shares up until the reverse acquisition is deemed to be the number of shares that were issued by TMN Group plc for the reverse acquisition. 

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

	6 months to 31 October 2009	6 months to 31 October 2008	Year to  30 April 2009
	£000s	£000s	£000s
Continuing operations
Loss for the period attributable to ordinary shareholders	(2,160)	(1,188)	(2,863)
Weighted average number of shares	346,522	291,943	291,943
Basic loss per share (pence per share)	(0.62)	(0.41)	(0.98)
Discontinued operation
Profit for the period attributable to ordinary shareholders	4,835	712	728
Weighted average number of shares	346,522	291,943	291,943
Basic earnings per share (pence per share)	1.40	0.24	0.25
Total operations
Profit/(loss) for the period attributable to ordinary shareholders	2,675	(476)	(2,135)
Weighted average number of shares	346,522	291,943	291,943
Basic earnings/(loss) per share (pence per share)	0.77	(0.16)	(0.73)

There were no dilutive instruments during the periods presented, therefore diluted earnings per share is the same as basic earnings per share.

7. Financing

As at 31 October 2009 the Group had net debt of £14.6 million. The principle source of financing for working capital requirements is an overdraft facility of £7.0 million of which £4.8 million was utilised as at 31 October 2009. Long-term borrowings of £9.8 million consist of a loan provided by Mike Danson that is repayable in 2014.

8. Business combinations

Business Review

In July 2008 the Company acquired the assets and liabilities of the Business Review business from Datamonitor plc for £0.7 million. Business Review was integrated into Progressive Media after acquisition.

SPG Media GroupOn 5 November 2008, Progressive acquired 100% of the issued share capital of SPG Media Group plc, a company based in the UK. The consideration was settled in cash. The amounts recognised for each class of assets, liabilities and contingent liabilities recognised at the acquisition date were as follows:

	Carrying value	Fair value adjustments	Fair value
	£000s	£000s	£000s
Property, plant and equipment	383	-	383
Intangible assets	4,749	1,594	6,343
Deferred tax assets	-	434	434
Trade and other receivables	3,748	-	3,748
Cash and cash equivalents	3,439	-	3,439
Total assets	12,319	2,028	14,347
Trade and other payables	(8,049)	-	(8,049)
Long-term provisions	(2,528)	-	(2,528)
Total liabilities	(10,577)	-	(10,577)
Net assets	1,742	2,028	3,770
Purchase consideration			9,989
Costs			502
			10,491
Less fair value of net assets acquired			(3,770)
Goodwill			6,721

The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon integration of SPG Media Group into Progressive and the acquisition of a management team and sales force.

TMN GroupOn 25 June 2009, Progressive completed a reverse acquisition of TMN Group plc, a company based in the UK. The reverse acquisition was achieved through the issue of new shares to Mike Danson. The amounts recognised for each class of assets, liabilities and contingent liabilities recognised at the acquisition date were as follows:

	Carrying value	Fair value adjustments	Fair value
	£000s	£000s	£000s
Property, plant and equipment	464	-	464
Intangible assets	3,838	-	3,838
Trade and other receivables	4,702	-	4,702
Total assets	9,004	-	9,004
Overdraft	(1,353)	-	(1,353)
Short-term borrowings	(2,499)	-	(2,499)
Trade and other payables	(6,035)	(200)	(6,235)
Deferred tax liabilities	(585)	-	(585)
Long-term provisions	(747)	-	(747)
Total liabilities	(11,219)	(200)	(11,419)
Net liabilities	(2,215)	(200)	(2,415)
Purchase consideration			3,784
Costs			926
			4,710
Add fair value of net liabilities acquired			2,415
Goodwill			7,125

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

Since the acquisition TMN Group contributed £13,000 profit after tax for the six months to 31 October 2009. Had the acquisition occurred on 1 May 2009 the consolidated Group revenue for the six months to 31 October 2009 would have been £20,002,000 and the profit for the six months to 31 October 2009 would have been £2,485,000.

9. Related party transactions

Mike Danson, Progressive Digital Media Group's Chairman, owns 85.47% of the Company's ordinary shares as at 28 January 2010. Mr Danson owns a number of businesses that interact with Progressive Digital Media Group. The principal transactions are as follows:

Sales of assets prior to reverse acquisition

As described in note 10 certain assets were excluded from the reverse acquisition and were sold to investment companies owned by Mr Danson. These included the construction and design titles, a property in Foots Cray and an investment in Huveaux plc. In June 2009, Progressive Digital Media Group sold the freehold property that it occupies to Estel Property Investments Limited, a company owned by Mr Danson. The property was sold for £2,671,000. The discontinued operation is detailed in note 10.

  Accommodation

Following the sale of the freehold property, Progressive Digital Media Group entered into a 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 other businesses that are owned by Mr Danson. 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 six months to 31 October 2009 was £285,000, net of a recharge of £51,000 to the other companies occupying the buildings.

Corporate support services

Corporate support services are provided to the other companies owned by Mr 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 six months to 31 October 2009 was £445,000.

Loans and guarantees

Mr Danson has provided loans that form the long-term borrowings of the Group during the periods presented. The loans do not carry any interest and are repayable in 2014.

10. Discontinued operation

Prior to the reverse acquisition Progressive Digital Media Limited disposed of Estel Investments and its construction and design titles to companies controlled by Mike Danson for £10,794,000. Estel Investments held the Group's investment in Huveaux Plc and a loan that was provided by Mike Danson to fund the investment. The assets and liabilities associated with the construction and design titles were also disposed of. The trading results of the construction and design titles were reported separately to management and have been treated as a discontinued operation for all periods reported in the income statement. 

	6 months to 31 October 2009	6 months to 31 October 2008	Year to 30 April 2009
	£000s	£000s	£000s
Discontinued operation
Revenue	758	4,752	8,496
Cost of sales	(118)	(533)	(1,806)
Gross profit	640	4,219	6,690
Distribution costs	(47)	(259)	(446)
Administrative costs	(510)	(2,771)	(4,834)
Other expenses	-	(225)	(449)
Operating profit	83	964	961
Other income	111	110	219
Finance expense	(91)	(85)	(169)
Profit before tax	103	989	1,011
Income tax expense	(29)	(277)	(283)
Profit after tax	74	712	728
Gain on disposal	4,761	-	-
Profit for the period from discontinued operation	4,835	712	728
Earnings per share:
Basic earnings per share from discontinued operation	1.40	0.24	0.25

 

Gain on sale of discontinued operation

	£000s
Property, plant and equipment	14
Intangible assets	3,451
Deferred tax assets	69
Investments	3,252
Inventories	253
Trade and other receivables	7,496
Cash and cash equivalents	153
Total assets	14,688
Trade and other payables	(4,283)
Long-term provisions	(553)
Long-term borrowings	(3,742)
Retirement benefit liabilities	(77)
Total liabilities	(8,655)
Net assets	6,033
Consideration received	10,794
Less net assets disposed of	(6,033)
Gain on sale of discontinued operation	4,761

  11. Details and Advisors

Company Secretary 

Kenneth Appiah 

Head Office and Registered Office

John Carpenter HouseJohn Carpenter Street

London EC4Y 0AN

Tel: + 44 (0) 20 7936 6400

Nominated Adviser and Broker 

Investec Bank plc2 Gresham Street

London EC2V 7QP

Solicitors 

Foot Anstey

Salt Quay HouseSutton Harbour

Plymouth PL4 0BN

Auditors 

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

Lloyds TSB Bank plc25 Gresham Street

London EC2V 7HN

Registered number

Company No. 3925319

ENDIR LLFETLTITFII

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