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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Promethean | LSE:PRW | London | Ordinary Share | GB00B60B6S45 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 39.875 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMPRW
RNS Number : 2974F
Promethean World Plc
19 February 2015
19 February 2015
Promethean World Plc ('Promethean' or 'the Group')
Preliminary financial results for the year ending 31 December 2014
Financial outlook for 2015 in line with existing market expectations
Financial results
-- Revenue down 16.3% to GBP118.2m, down 12.1% in local currency (2013: GBP141.2m) -- Gross margin 31.9% (2013: 35.8%) -- Adjusted EBITDA(1) GBP0.8m (2013: GBP9.4m) -- Operating loss GBP7.9m (2013: loss GBP5.9m) -- Pro forma net loss(2,3) GBP6.9m (2013: net loss GBP1.2m) -- Net cash of GBP4.7m as at 31 Dec 2014 (31 Dec 2013: GBP17.6m)
Operational review
-- Substantial progress on software development and rollout:
o ClassFlow(TM) 2.0 launched in the US in July 2014
o ClassFlow(TM) 2.5 released in January 2015
o Multi-year licence contracts signed to date with a total value of $4.3m
-- North America revenues up 1.2% on a local currency basis to $108.9m.
o Major strategic contract win in February 2014 - 10,000 classrooms in Miami-Dade
o Replacement market now evident - expected to accelerate in 2015
-- International revenues GBP52.3m, down 27.5%
o UK performance driven by replacement market
o Continental Europe and Asia Pacific weakness
o Slippage of certain Middle Eastern orders
o Central Asia in line with expectations
(1) excluding exceptional items, share-based payments, amortisation and depreciation,
(2) excluding exceptional items, share-based payments and amortisation of acquired intangible assets,
(3) stated on a pro forma basis excluding acquisition related fair value adjustments
Jim Marshall, Chief Executive Officer, commented:
"In 2014, we performed well in North America but this was more than offset by significant volatility and weakness in some of our International markets, slippage of certain contracts into this year and the foreign exchange impact. This is the first year of growth in North America since 2010. We anticipate further improvement in US education budgets for the school year commencing 1 July 2015.
"In the US, the replacement market is now evident and appears to be accelerating with the emerging adoption of interactive flat panels, which plays to our revitalised hardware portfolio. This replacement market can be expected to drive revenues, but with a product mix impact on margin.
"In addition, the market evolution aligns with our ClassFlow(TM) software, where we have made very good progress in its development and roll-out. ClassFlow(TM) was launched in the US last July and, today, we are announcing our first enterprise contracts. These are typically five year contracts, with annual licence fees paid at the start of the year, giving a positive impact on cash flow, with their revenue impact building over the current year onwards. We therefore look to the growth of high margin, recurring software revenues in 2015 and beyond.
"By contrast, political and economic uncertainty in many of our International markets meant they were volatile last year. Delays in the release of revised Education Frameworks and deferral of projects also impacted many of our European markets. Separately, large contracts in the Middle East, Europe and North America, which were originally expected to ship before the year end, are now expected this year.
"Throughout 2014, we have continued to focus on our strategy and innovation in both the software and hardware sides of our business. We will continue to release additional products and enhanced functionality on our ActivBoard Touch range and our ActivPanel Range. ClassFlow(TM) continues to achieve or exceed our internal milestones and we are gaining acceptance of ClassFlow(TM) as a highly differentiated and comprehensive enterprise solution."
Outlook
We expect our North American markets to continue to grow in 2015, driven by an improving economic outlook and the emergence of a replacement cycle, with a product mix increasingly weighted towards interactive flat panels. In the International region, we are seeing signs of increased stability and confidence in the majority of our markets, notwithstanding the possible macroeconomic effects from changes in outlook for Russia and the Eurozone. We therefore expect an increase in International revenues in 2015.
Our first ClassFlow(TM) revenues will be recognised during 2015. Strategically significant, and gross margin enhancing, they will start as a small, though recurring, proportion of overall Group revenues. Our pipeline of opportunities for ClassFlow(TM) continues to grow and we expect this to further accelerate in 2015.
We anticipate that the financial outlook for 2015 will be in line with existing market expectations and are confident about the Company's product range and competitive position. During the first half of 2015, the business will utilise both its operating cash flows and bank facility to fund continued investment in new product development and working capital. The investment in working capital is expected to unwind over the second half of the year following the key Q2 sales period.
Analyst presentation
A briefing to analysts will take place at 08:30 on Thursday 19 February 2015 at Citigate Dewe Rogerson, 3 London Wall Buildings, London Wall, EC2M 5SY. A copy of the presentation slides will be available on the 'Results and Presentations' page in the investor relations section of www.prometheanworld.com.
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Promethean World Plc + 44 (0) 1254 290749
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Business Performance
GBPm unless stated 2014 2013
----------------------------------------------- ------- -------
Revenue: as reported 118.2 141.2
Revenue: constant currency 118.2 134.4
Adjusted EBITDA(1) 0.8 9.4
Adjusted operating loss(2) (7.1) (0.7)
Pro forma net loss(2,3) (6.9) (1.2)
Pro forma basic earnings per share(2,3,4) (p) (3.41) (0.58)
(4) calculated using the weighted average number of ordinary shares per the basic loss per
share calculation.
Results under a statutory basis
GBPm unless stated 2014 2013
-------------------------- ------- -------
Revenue 118.2 141.2
Operating loss (7.9) (5.9)
Operating margin N/a N/a
Net loss (16.5) (5.8)
Basic loss per share (p) (8.17) (2.89)
Cash flow
GBPm unless stated 2014 2013
------------------------------- ------- -----
Free cash (outflow)/inflow(5) (10.7) 13.7
Net cash as at 31 December 4.7 17.6
(5) defined as Adjusted EBITDA less capital expenditure and changes in working capital excluding
exceptional provisions
Key metrics
2014 2013
--------------------------------------- ---------- ----------
Volumes
Interactive display systems 121,977 128,677
Learner response system handsets 291,552 398,944
Average Selling Prices (GBP)
Interactive display systems 924 1,026
Learner response system handsets 19.0 22.8
Promethean Planet (as at 31 December)
Members 2,098,409 1,833,200
Resources 95,412 92,832
Operational review
Trading environment
2014 has been a year of contrasting performance between our North American and International sales regions. In North America, we have returned to growth in unit volumes sold, local currency revenues and market share. By contrast in our International region, trading conditions have been more volatile in many European and Asia Pacific countries, particularly in the first half of the year.
The significant education market trends have continued during 2014. In the UK and US, a replacement market for interactive classroom displays is increasingly evident, reflected in increasing demand for interactive flat panels. In the US, this replacement market can be expected to accelerate. In other established education technology markets, interactive flat panel sales adoption can vary depending on the penetration of technology and available budgets; however, it is clear that the market direction is now set.
In the more highly penetrated markets, the adoption of one-to-one devices (tablets/Chromebooks) has continued at pace, leading to a range of disparate devices in classrooms. This underscores the opportunity for Promethean's ClassFlow(TM) software. ClassFlow(TM) connects these disparate devices, allowing teachers to obtain instant feedback on student comprehension and intervene during a lesson, in the moment of learning. It also simplifies the preparation and delivery of interactive lessons while it captures classroom data, facilitating enterprise reporting at all levels (teacher, headmaster/principal and administrator level).
North America
Promethean traded well in the North American market during 2014, with revenues of GBP65.9m (2013: GBP69.1m). The relative weakness of the US dollar in the first half of the year impacted our reported revenues upon translation into GBP. On a local currency basis, however, our North American revenues were 1.2% ahead of 2013 and were up 8.7% in the fourth quarter.
We had significant success in our front-of-class display tenders, most notably the Miami-Dade contract for over 10,000 ActivBoard Touch interactive displays in the first half. We also had a series of significant tender wins during the rest of the year in many other districts. The Miami-Dade contract also incorporated the provision of ongoing professional development support to help teachers adopt and fully benefit from this investment in new technology. This teacher transformation initiative is being driven and deployed with ClassFlow(TM) imaged on approximately 150,000 one-to-one devices being deployed in Miami-Dade. We continue to believe that the combined impact of professional services with hardware deployments strengthens Promethean's credentials in promoting learning achievements.
In the US market, we are increasingly seeing a shift in product mix towards the ActivPanel, mirroring the trend in other early adopter markets such as the UK. While, at present, the interactive whiteboard still sells in significantly higher volumes, we believe that the shift in product mix is showing the emergence of a replacement cycle.
The market for dedicated Learner Response Devices (LRS) devices in North America continues to contract, as the adoption of devices (notebooks, Chromebooks, tablets and netbooks) in classrooms continues to accelerate. In North America, in 2014, it is estimated that 8.9m devices were purchased for use in the K-12 education sector (2013: 6.8m), (Source: Futuresource Consulting).
International
In the International region, which includes all markets outside of North America, revenue was GBP52.3m (2013: GBP72.1m), down 27.5% on 2013. Sales volumes in 2014 were significantly lower in many of the key European markets, including Germany, France, Russia and Scandinavia. In certain of these European markets, purchasing decisions have been delayed due to a slippage in the completion of Education Frameworks and deferral of projects due to budgetary constraints. In addition, political uncertainty has affected the timing of tender opportunities in Asia, resulting in a significant impact on sales volumes throughout the year.
During 2014, a replacement cycle has been evident in the UK market, with sales volumes of the interactive flat panel now outstripping the interactive whiteboard. We are also seeing increased interactive flat panel demand in Nordic countries and Australia, all of which are relatively highly penetrated markets. Our ActivPanel Touch range is well positioned in these markets.
Market share
Promethean has increased its global share (excluding China and Turkey) of the K-12 interactive display market which comprises interactive whiteboards and flat panels. For the twelve month period ended 30 September 2014, Promethean's market share was 25.1% (twelve months ended 31 December 2013: 22.9%). Although Promethean has grown its share of this market over the twelve months to 30 September 2014, overall volume sales in that period were 13.6% lower than in the twelve months to 30 September 2013.
In the dedicated student response device market (global K-12, excluding China and Turkey), Promethean's market share increased to 43.4% for the twelve months ended 30 September 2014 (twelve months ended 31 December 2013: 33.1%). However, overall volume sales were down by 52.1% for the twelve months ended 30 September 2014 (Source: Futuresource Consulting).
Product development
Interactive displays
During 2014, our ActivPanel Touch product has gained market share in this growing segment of the interactive display market. The ActivPanel Touch is now available in four sizes (55", 65", 70" and 84") with the latest model supporting Windows, Mac, and Linux operating systems and positioned to compete effectively on functionality and price in 2015.
The ActivBoard Touch range of interactive displays enables Promethean to compete effectively on price whilst delivering the touch capability required by customers. The ActivBoard Touch was the product selected by Miami-Dade and has been installed in over 10,000 of its classrooms during 2014. The functionality of our ActivBoard Touch has been enhanced during the year with the premium version of this product now supporting six touches.
Development is ongoing on Promethean's range of interactive displays, including a digital pen for both the ActivBoard Touch and ActivPanel Touch. Promethean is also developing its next generation interactive technology, which is expected to launch in Q2 2015.
Software development - ClassFlow(TM)
ClassFlow(TM) is our cloud-based application that provides an all-in-one teaching tool for creating and orchestrating interactive multi-media lessons across a connected learning environment. Lessons can be synchronized and delivered across classroom displays and handheld devices. ClassFlow(TM) gives teachers insight into student learning and progress through polling and rich interactive formative assessments, which enable teachers to instantly adjust any lesson in the moment of learning and to personalise instruction.
Following a beta release of ClassFlow(TM) at BETT in January 2014, ClassFlow(TM) was officially launched to the US market in July 2014. The most recent update ClassFlow(TM) 2.5 was released in January 2015, which introduces ClassFlow(TM) for Schools providing functionality at school or district level. ClassFlow(TM) is now available in 21 languages.
The high level of interest generated in the US led us to establish a dedicated sales team in 2014, ahead of our initial plans. To date this has yielded the signature of multi-year ClassFlow(TM) licence agreements with a total contract value of $4.3m. The first revenues from these contracts will be recognised in 2015. As at 31 December 2014, there were ClassFlow(TM) registrants in over 45 countries.
In addition to the North American market, we have identified other established markets in the International region in which to roll out ClassFlow(TM) . We have proof of concept pilots underway in a number of International markets.
Mobile device solutions
Promethean's ClassFlow(TM) software can be deployed on a range of one-to-one devices (operating on Android, iOS and Windows 8 platforms) to facilitate the flow of data between the teacher and students, during a lesson. Given this, rather than being a minor niche player in the very competitive tablet market, Promethean withdrew its KUNO tablet offering in 2014.
Our ActivExpression and ActiVote devices lead the dedicated learner response handsets in the global K-12 market. They provide a cost-effective way to enhance interaction and feedback between the teacher and students and enable data to flow in a classroom that does not have a WiFi internet connection. Accordingly, these dedicated devices remain an integral part of Promethean's product portfolio, although the dedicated LRS handset market continues to decline.
Other software, content and professional services
Promethean continues to generate revenues from the sale of lesson resources created from our partnership with Houghton Mifflin Harcourt ('HMH'), although at a lower level than in 2013. Multiple Strategic Alliances are under construction for 2015 around content and ClassFlow(TM) . We have also launched our ClassFlow(TM) Teacher Competency Centre in Miami based around the Miami-Dade project. We also established our ClassFlow(TM) Lesson Plan Competency Centre on the campus of the University of South Florida (USF), Florida's largest university and in the top 40 for research in North America. This is in close co-operation with USF's College of Education, one of the most well respected Colleges of Education in North America. Promethean also generates revenues from the licensing of our award-winning ActivInspire software to Epson, for use on its interactive projectors, and to other selected third parties.
Our professional development and consultation services are designed to help teachers, administrators, schools and districts effectively implement educational solutions and support student achievement. During 2014, revenues from professional services were ahead of the prior year and we believe they represent a significant differentiator in large scale tender opportunities whilst also providing support and implementation for the deployment of ClassFlow(TM) .
Promethean Planet membership continues to grow, up 14.5% during 2014 to 2.1m members as at 31 December 2014. Promethean has started transitioning Planet members into ClassFlow(TM) users; this process will accelerate in 2015.
Cost management
During 2014 we have continued to manage our cost base tightly, removing a layer of central management early in the year and reducing the scale of our Seattle office in the US. We have prioritised our resources so we continue to invest in product development and have also established a sales team to generate recurring ClassFlow(TM) licence revenues.
Financial review
Revenue, product volumes and average selling prices
Group
Group revenues were GBP118.2m, down 16.3% versus 2013 (2013: GBP141.2m) or 12.1% down on a local currency basis. By product, interactive display systems revenues for the group were GBP112.6m, 14.7% lower than sales of GBP132.1m last year. Learner response system (LRS) revenues were GBP5.5m, 39.2% lower than last year (2013: GBP9.1m).
Promethean sold 121,977 interactive display systems (2013: 128,677 systems), a reduction of 5.2% compared to last year.Average selling price (ASP) for the Group's interactive display systems in 2014 was GBP924, down 10.0% from GBP1,026 in 2013. This reflects a changing product mix, with greater sales of the ActivBoard Touch, lower royalty revenues from Houghton Mifflin Harcourt (HMH) lesson content, as well as the currency translation impact on US Dollar revenues, all of which reduced ASPs. This was only partially offset by increased 2014 sales volumes of the ActivPanel Touch.
North America
In 2014, North America revenues of GBP65.9m represented 55.8% of total Group revenues (2013: GBP69.1m, 48.9% of Group revenues). In local currency terms, North American revenues were $108.9m (2013: $107.7m), up 1.2%.
In North America, interactive display system revenues were GBP61.9m (2013: GBP63.1m) and sales of learner response systems of GBP4.0m (2013: GBP6.0m), reductions of 1.8% and 33.5% respectively. Sales volumes of interactive display systems increased by 24.3% to 42,579 from 34,255 in 2013.
The North America ASP of GBP1,454 was down by 21.0% (2013: GBP1,841) due tolower lesson content revenues, large tender pricing on the Miami-Dade contract and sales mix, as well as the adverse currency translation impact.
International
International revenues in 2014 were GBP52.3m, 27.5% below last year (2013: GBP72.1m). Sales of interactive display systems in the International region of GBP50.7m (2013: GBP69.0m)were 26.5% lower due to a reduction in sales volumes from 94,422 in 2013 to 79,398 in 2014.
The International ASP reduced to GBP639 (2013: GBP731) primarily due to changes in country and product mix in comparison to the prior year.
Gross profit
Promethean's gross profit for the year was GBP37.7m versus GBP50.6m in 2013, reflecting the reduction in both revenues and gross margin.
Gross margin in 2014 was 31.9% (2013: 35.8%), due to the impact of lower lesson content revenues in the period (in 2013, lesson content revenues benefited from royalties arising from the initial adoption of HMH interactive curriculum content resources), large tender pricing and product mix (including lower LRS revenues and increased interactive flat panel sales) all of which were only partially offset by the geographical mix of sales being more heavily weighted towards North America.
Gross profit for North America was GBP21.8m in 2014 (2013: GBP27.7m), primarily reflecting a reduction in gross margin during the period. The gross margin in North America was 33.1% (2013: 40.0%), the reduction primarily reflecting 2013 having benefited from higher HMH content adoption revenues and the margin impact from Miami-Dade contract revenues in 2014.
Gross profit for International was GBP15.8m in 2014, down from GBP22.9m in 2013 due to lower revenues and product mix. The gross margin in International was 30.3% (2013: 31.8%).
Operating expenses
Operating expenses, excluding exceptional items, share-based payments, depreciation and amortisation, decreased from GBP41.2m in 2013 to GBP36.9m in 2014, a reduction of 10.5%.Sales and marketing costs for the year were 6.1% lower than 2013, despite the Group's additional investment in ClassFlow(TM) sales and marketing initiatives following the positive market response to its launch in the US. Administrative expenses were 10.0% lower than in 2013.
Total gross research and development (R&D) expenditure (before amounts capitalised) was GBP12.6m (2013: GBP13.1m) as Promethean maintained its investment in core R&D projects. Net of capitalised development expenditure, which Promethean is required to recognise under IAS 38 Intangible Assets, R&D costs were GBP3.2m versus GBP5.0m last year.
Exceptional items
The net exceptional charge for the year was GBP0.5m (2013: GBP3.5m), including GBP1.9m of reorganisation costs partially offset by credits of GBP1.0m (2013: GBP0.7m) for the partial release of a prior year trade receivable impairment provision and a GBP0.5m credit in respect of the release of an onerous lease provision.
EBITDA and EBIT
Adjusted EBITDA excludes share-based payment charges and exceptional costs. Adjusted EBIT also excludes the amortisation charge on acquired intangible assets. The Group believes that these adjusted measures are representative of its underlying performance.
Promethean's Adjusted EBITDA was GBP0.8m in 2014 (2013: GBP9.4m) reflecting lower revenues and the reduction in gross margin in 2014.
Depreciation and amortisation (excluding amortisation of acquired intangible assets) was GBP7.9m, a decrease of GBP2.2m or 21.7% (2013: GBP10.1m).
Adjusted operating loss (EBIT) was GBP7.1m in 2014 (2013: GBP0.7m loss).
Interest and tax
The Group had net finance costs of GBP1.7m in the year (2013: GBP0.8m net finance costs). As at 31 December 2014 the Group had a closing net cash position of GBP4.7m (2013: GBP17.6m).
Net finance costs of GBP1.7m primarily comprised GBP1.2m relating to foreign exchange losses (2013: GBP0.5m), interest costs and commitment fees of GBP0.3m (2013: GBP0.2m), amortisation of debt issue costs of GBP0.2m (2013: GBP0.2m), a GBP0.1m negative fair value adjustment to financial assets (2013: positive adjustment of GBP0.1m).
The Group's consolidated effective tax rate for 2014 was -71.0% compared to 13.6% in 2013. In 2014, the Group has derecognised the brought forward deferred tax asset of GBP5.6m in respect of losses in its UK subsidiary. Following a review of forecasts, management have concluded that the UK subsidiary is not expected to utilise a significant amount of tax losses in the short-term, partly due to the availability of other reliefs, such as R&D tax credits. This position will be kept under review as revenues from ClassFlow(TM) increase. The 2013 effective tax rate reflected the reduction in the UK tax rates applicable to deferred tax assets from 23% to 20%, which was partially offset by adjustments in respect of prior periods.
Pro forma net income and basic earnings per share
The Group uses the pro forma basis as it believes it to be a consistent measure of underlying performance. On a pro forma basis, excluding the amortisation of acquired intangible assets and exceptional items and assuming an effective tax rate of 22% in 2014, versus 24% in 2013, pro forma net loss for 2014 was GBP6.9m compared to a net loss of GBP1.2m in 2013. Pro forma basic loss per share was 3.41p in 2014 (2013: loss per share of 0.58p) and was calculated as follows:
GBPm unless stated 2014 2013
-------------------------------------------- ------- -------
Loss before tax as reported (9.6) (6.7)
Adjusted for:
Exceptional items and share-based payments 0.8 4.4
Amortisation of acquired intangible assets - 0.8
Pro forma loss before tax (8.8) (1.5)
Tax thereon (2014: 22.0%; 2013: 24.0%) 1.9 0.4
------- -------
Pro forma net loss (6.9) (1.2)
------- -------
Number of ordinary shares (m)(1) 202.1 200.6
Pro forma basic loss per share (p) (3.41) (0.58)
------- -------
(1) The number of ordinary shares is the weighted average number of ordinary shares as per the basic EPS calculation.
Cash flow
The Group's net cash balance as at 31 December 2014 was GBP4.7m (2013: GBP17.6m). The Group's free cash flow in 2014 was an outflow of GBP10.7m (2013: GBP13.7m inflow), calculated as follows:
GBPm 2014 2013
------------------------------------- ------- ------
Adjusted EBITDA 0.8 9.4
Adjusted for:
Changes in trading working capital 0.4 13.5
Capital expenditure (2.1) (1.1)
Capitalised development expenditure (9.8) (8.1)
------- ------
Free cash flow (10.7) 13.7
Net exceptional costs (2.1) (2.0)
Tax (paid)/received (1.0) 0.2
Other net finance costs(1) 0.9 (2.1)
------- ------
Net (decrease)/increase in cash (12.9) 9.8
------------------------------------- ------- ------
(1) 2013 net finance costs include transaction costs in respect of the ABL facility with Wells Fargo Bank.
In 2014, lower revenues and reduced gross margins have impacted cash flow as has the continued investment in new product development, most notably in developing ClassFlow(TM) . Free cash flow in 2013 was boosted by a significant one-off reduction in working capital, of GBP13.5m, to a more sustainable level for the business.
The Group has in place a secured bank facility agreement for up to GBP25m arranged by Burdale Financial Limited with Wells Fargo Bank. This asset based facility matures on 30 September 2017. As the Group continues to invest in the development of ClassFlow(TM) and increases its working capital for the key Q2 selling period, it will become a net borrower. The investment in working capital is expected to unwind over the second half of the year.
Summary
Throughout 2014 we have continued to invest in new product development. For the launch of ClassFlow(TM) we have also built an in-house sales team to drive software licence revenues. In 2015, we anticipate that ClassFlow(TM) will become increasingly self-sufficient at an operating level. Until such time as this is achieved, we will use a combination of cash generated from our hardware business and, where appropriate, our borrowing facility to pursue this transformational opportunity.
Risks and uncertainties
The principal risks and uncertainties facing the Group have not changed significantly from those set out in the Company's Annual Report 2013. The risks included strategic risks, operational risks, financial and regulatory risks. The full Annual Report and Accounts are available at www.prometheanworld.com.
Forward looking statements
The information in this release is based on management information.
This release may include statements that are forward looking in nature. The words "believe", "anticipate", "expect", "intend", "may" and "should" and other similar expressions that are predictions of, or indicate, future events or trends are forward looking statements. By their nature, forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Accordingly, forward looking statements are not, and should not be construed as being, guarantees of the Company's future performance, financial condition or liquidity, or of the development of, or trends affecting, the industry in which the Company operates. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, revise or change any forward looking statements to reflect events or developments occurring after the date of this report.
Consolidated income statement
For the year ended 31 December Note 2014 2013
GBP000 GBP000
------------------------------------------------------- ----- --------- ---------
Revenue 3 118,174 141,158
Cost of sales (80,477) (90,572)
------------------------------------------------------- ----- --------- ---------
Gross profit 37,697 50,586
Operating expenses (45,599) (56,491)
---------
Analysis of results from operating activities:
Earnings before interest, tax, depreciation,
amortisation, exceptional
items and share based payments 839 9,407
Depreciation and amortisation (excluding amortisation
of acquired
intangible assets) (7,934) (10,129)
Amortisation of acquired intangible assets - (782)
Exceptional costs 4 (1,932) (4,267)
Exceptional income 4 1,451 742
Share-based payments 12 (326) (876)
------------------------------------------------------- ----- --------- ---------
Results from operating activities (7,902) (5,905)
---------
Finance income 5 20 192
Finance expense 5 (1,766) (993)
------------------------------------------------------- ----- --------- ---------
Net finance expense (1,746) (801)
------------------------------------------------------- ----- --------- ---------
Loss before income tax (9,648) (6,706)
Income tax (expense)/credit 6 (6,854) 909
------------------------------------------------------- ----- --------- ---------
Loss for the year(1) (16,502) (5,797)
------------------------------------------------------- ----- --------- ---------
Loss per share
Basic loss per share (pence) 10 (8.17) (2.89)
Diluted loss per share (pence) 10 (8.17) (2.89)
------------------------------------------------------- ----- --------- ---------
Consolidated statement of comprehensive income
For the year ended 31 December 2014 2013
GBP000 GBP000
----------------------------------------------- --------- --------
Loss for the year from the income statement (16,502) (5,797)
Foreign currency translation differences for
foreign operations 1,182 291
Net gain/(loss) on net investments in foreign
operations 694 (209)
Total comprehensive income for the year(1) (14,626) (5,715)
------------------------------------------------ --------- --------
(1)All attributable to Equity shareholders and is entirely from continuing operations
Consolidated statement of financial position
As at 31 December Note 2014 2013
GBP000 GBP000
-------------------------------------------------- ----- ---------- ----------
Assets
Property, plant and equipment 7,534 7,741
Intangible assets 8 18,141 14,219
Deferred tax assets 2,364 8,326
-------------------------------------------------- ----- ---------- ----------
Total non-current assets 28,039 30,286
-------------------------------------------------- ----- ---------- ----------
Inventories 12,007 8,670
Derivative financial assets 105 163
Trade and other receivables 22,672 24,601
Current tax assets 1,216 838
Cash and cash equivalents 4,706 17,591
-------------------------------------------------- ----- ---------- ----------
Total current assets 40,706 51,863
-------------------------------------------------- ----- ---------- ----------
Total assets 68,745 82,149
-------------------------------------------------- ----- ---------- ----------
Liabilities
Trade and other payables (28,119) (25,937)
Provisions 11 (3,113) (3,735)
Current tax liabilities (665) (779)
-------------------------------------------------- ----- ---------- ----------
Total current liabilities (31,897) (30,451)
-------------------------------------------------- ----- ---------- ----------
Provisions 11 (225) (685)
Total non-current liabilities (225) (685)
-------------------------------------------------- ----- ---------- ----------
Total liabilities (32,122) (31,136)
-------------------------------------------------- ----- ---------- ----------
Net assets 36,623 51,013
-------------------------------------------------- ----- ---------- ----------
Equity
Share capital 20,320 20,000
Share premium 99,796 99,796
Capital reserve 93,990 93,990
Translation reserve (FCTR) 6,010 4,134
Retained earnings (183,493) (166,907)
-------------------------------------------------- ----- ---------- ----------
Total equity (all attributable to equity holders
of the Company) 36,623 51,013
-------------------------------------------------- ----- ---------- ----------
Consolidated statement of changes in equity
Share Share Capital Translation Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ --------- --------- --------- ------------ ---------- --------
Balance at 1 January 2013 20,000 99,796 93,990 4,052 (161,897) 55,941
Total comprehensive income
for the year
Loss for the year - - - - (5,797) (5,797)
--------- --------- --------- ------------ ---------- --------
Foreign currency translation
differences - - - 291 - 291
Net loss on net investment
in foreign operations - - - (209) - (209)
Total other comprehensive
income - - - 82 - 82
------------------------------------ --------- --------- --------- ------------ ---------- --------
Total comprehensive income
for the year - - - 82 (5,797) (5,715)
------------------------------------ --------- --------- --------- ------------ ---------- --------
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Share-based payments (net
of tax) - - - - 787 787
------------------------------------ --------- --------- --------- ------------ ---------- --------
Total contributions by and
distributions to owners - - - - 787 787
Balance at 31 December 2013 20,000 99,796 93,990 4,134 (166,907) 51,013
------------------------------------ --------- --------- --------- ------------ ---------- --------
Share Share Capital Translation Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ --------- --------- --------- ------------ ---------- ---------
Balance at 1 January 2014 20,000 99,796 93,990 4,134 (166,907) 51,013
Total comprehensive income
for the year
Loss for the year - - - - (16,502) (16,502)
--------- --------- --------- ------------ ---------- ---------
Foreign currency translation
differences - - - 1,182 - 1,182
Net gain on net investment
in foreign operations - - - 694 - 694
Total other comprehensive
income - - - 1,876 - 1,876
------------------------------------ --------- --------- --------- ------------ ---------- ---------
Total comprehensive income
for the year - - - 1,876 (16,502) (14,626)
------------------------------------ --------- --------- --------- ------------ ---------- ---------
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Issue of share capital to
Employee Benefit Trust 320 - - - (320) -
Share-based payments (net
of tax) - - - - 236 236
------------------------------------ --------- --------- --------- ------------ ---------- ---------
Total contributions by and
distributions to owners 320 - - - (84) 236
Balance at 31 December 2014 20,320 99,796 93,990 6,010 (183,493) 36,623
------------------------------------ --------- --------- --------- ------------ ---------- ---------
Consolidated statement of cash flows
For the year ended 31 December Note 2014 2013
GBP000 GBP000
--------------------------------------------- ---- -------- -------
Cash flows from operating activities
Loss for the year (16,502) (5,797)
Adjustments for:
Depreciation 2,515 3,250
Amortisation of intangible assets 5,419 7,661
Impairment losses on property, plant
and equipment - 125
Impairment losses on intangible assets - 4,142
Impairment losses on trade receivables 286 -
(Reversal of) exceptional impairment
loss on trade receivables (977) (674)
Loss/(gain) on sale of property, plant
and equipment 52 (9)
Net finance expense 5 1,746 801
Income tax expense/(credit) 6 6,854 (909)
Share-based payments 12 326 876
--------------------------------------------- ---- -------- -------
(281) 9,466
Change in inventories (2,806) 6,891
Change in trade and other receivables 2,890 4,054
Change in trade and other payables 392 2,537
Change in provisions (1,081) (2,013)
--------------------------------------------- ---- -------- -------
Cash (used in)/generated from operations (886) 20,935
Finance cost received/(paid) 447 (1,058)
Income tax (paid)/received (978) 210
Cash inflow/(outflow) from settlement
of derivatives 461 (226)
--------------------------------------------- ---- -------- -------
Net cash (outflow)/inflow from operating
activities (956) 19,861
--------------------------------------------- ---- -------- -------
Cash flows from investing activities
Finance income received 20 48
Proceeds from sale of property, plant
and equipment 92 126
Acquisition of property, plant and equipment (2,285) (1,252)
Development expenditure (9,797) (8,072)
Net cash used in investing activities (11,970) (9,150)
--------------------------------------------- ---- -------- -------
Cash flows from financing activities
Transaction costs - new bank facility - (938)
Net cash used in financing activities - (938)
--------------------------------------------- ---- -------- -------
Net (decrease)/increase in cash and cash
equivalents (12,926) 9,773
Cash and cash equivalents at 1 January 17,591 8,011
Exchange rate effects 41 (193)
--------------------------------------------- ---- -------- -------
Cash and cash equivalents at 31 December 4,706 17,591
--------------------------------------------- ---- -------- -------
Notes
1 Reporting entity
Promethean World Plc (the "Company") is a company registered in England and Wales. The address of the Company's registered office is Promethean House, Whitebirk Industrial Estate, Lower Philips Road, Blackburn, Lancashire BB1 5TH.
The Group's Promethean brand is a leader in the global market for interactive learning technology. The Group creates, develops, supplies and supports leading-edge, interactive learning technology primarily for the education market. Promethean's solutions include its interactive display systems (ActivBoard, ActivTable and ActivPanel), its Learner Response Systems (ActiVote and ActivExpression) and its specialised teaching software (ActivInspire, ActivEngage and ClassFlow(TM) ).
Promethean also provides comprehensive training and support and, now with over 2.1 million members, Promethean Planet (www.prometheanplanet.com) is the world's largest online community for users of interactive learning technology, providing user-generated and premium content and is a forum for teachers to exchange ideas and experience.
The Group financial statements consolidate those of the Company and its subsidiaries for the year ended 31 December 2014.
The consolidated financial statements of Promethean World Plc have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU.
The consolidated and Company financial statements were approved by the Board of Directors on 18 February 2015.
2 Accounting policies
The accounting policies applied are fully disclosed in the Promethean World Plc consolidated financial statements for the year ended 31 December 2014.
There have been no changes in accounting policies during the year ending 31 December 2014.
Going concern
Having made appropriate enquiries, the Directors are satisfied that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have continued to adopt the going concern basis in preparing the consolidated financial statements.
3 Operating segments
The Group is comprised of two reportable segments based on the destination of sales (North America and International) and they do not arise as a result of an aggregation process.Performance by segment is managed and reviewed to gross profit. For internal reporting purposes, aside from trade receivables, no allocation is made between these segments for balances in the statement of financial position, as regardless of an asset's geographical location it could serve each segment.
3 Operating segments (continued)
Disclosures of segment performance are provided in the tables below:
Reportable segmental revenue 2014 2013
GBP000 GBP000
----------------------------- ------- -------
North America 65,907 69,094
International 52,267 72,064
----------------------------- ------- -------
118,174 141,158
----------------------------- ------- -------
Reportable segmental profit (gross profit) 2014 2013
GBP000 GBP000
------------------------------------------- ------ ------
North America 21,845 27,659
International 15,852 22,927
------------------------------------------- ------ ------
37,697 50,586
------------------------------------------- ------ ------
Reconciliation to loss before income tax 2014 2013
GBP000 GBP000
------------------------------------------- -------- --------
Reportable segmental profit (gross profit) 37,697 50,586
Sales and marketing expenses (26,595) (28,326)
Administrative expenses (7,051) (7,836)
Research and development (net) (3,212) (5,017)
------------------------------------------- -------- --------
Adjusted EBITDA 839 9,407
Depreciation (2,515) (3,250)
Amortisation (5,419) (6,879)
Amortisation of acquired intangible assets - (782)
Exceptional costs(1) (1,932) (4,267)
Exceptional income(1) 1,451 742
Share based payments (326) (876)
Net finance expense (1,746) (801)
------------------------------------------- -------- --------
Loss before income tax (9,648) (6,706)
------------------------------------------- -------- --------
(1) Further details of the exceptional items are disclosed in note 4.
3 Operating segments (continued)
Further analysis of the Group's revenues by type of product is provided below:
Revenue by product 2014 2013
GBP000 GBP000
-------------------------------------------- ------- -------
Interactive display systems and accessories 112,647 132,072
Learner response systems and assessment 5,527 9,086
-------------------------------------------- ------- -------
118,174 141,158
-------------------------------------------- ------- -------
Interactive display systems and accessories
revenue by region 2014 2013
GBP000 GBP000
-------------------------------------------- ------- -------
North America 61,901 63,067
International 50,746 69,005
-------------------------------------------- ------- -------
112,647 132,072
-------------------------------------------- ------- -------
4 Exceptional items
2014 2013
GBP000 GBP000
Reorganisation costs 1,932 4,267
Exceptional costs 1,932 4,267
---------------------- ------- -------
Reversal of trade receivable impairment 977 674
Reversal of onerous lease provisions 474 -
Profit on disposal of tangible fixed assets - 68
Exceptional income 1,451 742
--------------------------------------------- ------ ----
Reorganisation costs
Reorganisation costs principally comprise of the cost of substantial changes to the composition of the Executive Leadership Team, which includes payments to a past Director, and the costs of a significant downsizing of the Seattle office in the United States. It also includes settlement costs in respect of the withdrawal of the Promethean KUNO tablet offering.
Impairment of trade receivables
An exceptional impairment loss was recognised in 2012 related to one specific reseller. At December 2014, management has reviewed the provision and concluded that a GBP1.0m reversal of the impairment was appropriate, based on funds recovered in the year.
Onerous lease provisions
The Group was able to reverse onerous lease provisions of approximately GBP0.5m following the successful sub-let of one of its premises and from the finalisation of liabilities in a further two premises.
5 Finance income and expense
2014 2013
GBP000 GBP000
---------------------------------------------- -------- -------
Interest income on bank deposits 20 48
Net change in fair value of financial assets
at fair value through profit or loss - 144
Finance income 20 192
---------------------------------------------- -------- -------
Interest and commitment fee expense on
bank facility (254) (208)
Amortisation of costs of obtaining bank
facility (221) (252)
Foreign exchange losses (1,233) (533)
Net change in fair value of financial assets
at fair value through profit or loss (58) -
---------------------------------------------- -------- -------
Finance expense (1,766) (993)
---------------------------------------------- -------- -------
Net finance expense recognised in profit
or loss (1,746) (801)
---------------------------------------------- -------- -------
6 Income tax expense
2014 2013
GBP000 GBP000
--------------------------------------------------- ------- --------
Current tax expense
Current period 910 1,112
Adjustment for prior periods 51 (717)
--------------------------------------------------- ------- --------
Current tax expense 961 395
--------------------------------------------------- ------- --------
Deferred tax expense
Origination and reversal of temporary differences 5,898 (2,075)
Reduction in tax rates - 626
Adjustments for prior periods (5) 145
--------------------------------------------------- ------- --------
Deferred tax expense/(credit) 5,893 (1,304)
--------------------------------------------------- ------- --------
Total tax expense/(credit) 6,854 (909)
--------------------------------------------------- ------- --------
In 2014, the Group derecognised the brought forward deferred tax asset of GBP5.6m in respect of losses in its UK subsidiary.
7 Dividends per ordinary share
The Company is not in a position to pay dividends at this time as it continues to focus on investment in its product portfolio and the rollout of ClassFlow software licences. The total dividend for the year was therefore GBPnil (2013: GBPnil).
8 Intangible assets
Other intangible assets
The movements in the net book value of development assets during the year were as follows:
2014 2013
GBP000 GBP000
----------------------------------------- -------- --------
Net book value of development assets at
1 January 14,219 17,918
Additions from internal development 9,341 8,072
Exceptional impairment charge - (4,142)
Effect of movement in exchange rates - (5)
Amortisation for the year (5,419) (7,624)
----------------------------------------- -------- --------
Net book value of development assets at
31 December 18,141 14,219
----------------------------------------- -------- --------
The Group's most significant intangible assets relate to two development projects; ClassFlow(TM) (net book value GBP9.0m) and its next generation interactive display (net book value GBP4.8m).
9 Share capital and reserves
On 25 March 2014, the Company allotted and issued 3,200,000 ordinary shares of 10 pence each to the Company's Employee Benefit Trust, to satisfy the Company's obligation to transfer ordinary shares to employees following the anticipated exercise of future share options and vesting of conditional share awards (2013: GBPnil). The total share capital allotted and in issue as at 31 December 2014 was 203,200,000 ordinary 10 pence shares (2013: 200,000,000).
Kleinwort Benson (Jersey) Trustees Limited as trustees of the Chalkfree Employee Benefit Trust (EBT) hold shares on trust for the Company which are primarily issued to employees to satisfy the Company's obligations in relation to its share schemes. These shares are categorised as Treasury Shares and are excluded from the calculation of earnings per share (see note 10). At 31 December 2014, the EBT held 1,489,769 shares in the Company (2013: 342,245 shares).
10 Earnings per share
Basic earnings per share
The calculation of basic loss/earnings per share is based on the loss attributable to ordinary shareholders as disclosed below and a weighted average number of ordinary shares outstanding, calculated as follows:
Loss attributable to ordinary shareholders 2014 2013
GBP000 GBP000
-------------------------------------------- --------- --------
Loss for the year attributable to ordinary
shareholders (16,502) (5,797)
-------------------------------------------- --------- --------
Weighted average number of ordinary shares
In thousands of shares 2014 2013
-------------------------------------------- -------- --------
Issued ordinary shares at 1 January 200,000 200,000
Effect of ordinary shares issued in the 2,464 -
year
Effect of Treasury Shares held (1,785) (496)
Effect of dilutive vested share options
not yet exercised 1,390 1,103
-------------------------------------------- -------- --------
Weighted average number of ordinary shares
at the year end 202,069 200,607
-------------------------------------------- -------- --------
Basic loss per share (pence) (8.17) (2.89)
-------------------------------------------- -------- --------
10 Earnings per share (continued)
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2014 was based on loss attributable to ordinary shareholders as disclosed below, and a weighted average number of ordinary shares outstanding calculated as follows:
2014 2013
GBP000 GBP000
--------------------------------------------- --------- --------
Loss attributable to ordinary shareholders
(basic and diluted) (16,502) (5,797)
--------------------------------------------- --------- --------
Weighted average number of shares (basic) 202,069 200,607
Effect of conversion of Promethean World - -
Plc share options
--------------------------------------------- --------- --------
Weighted average number of shares (diluted) 202,069 200,607
--------------------------------------------- --------- --------
Diluted loss per share (pence) (8.17) (2.89)
--------------------------------------------- --------- --------
No adjustment has been made to the weighted average number of shares for the purpose of both the 2014 and 2013 diluted earnings per share calculations as in both cases the effect would be anti-dilutive.
11 Provisions
As at
As at Created 31
Reversed Utilised
1 January in the in in 3 December Non-
2014 year the year the year 2014 Current current
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ---------- -------- --------- --------- ----------- -------- --------
Warranty 2,927 999 - (1,121) 2,805 2,805 -
Reorganisation
provisions
Restructuring 178 66 - (172) 72 72 -
Onerous lease 1,315 - (474) (380) 461 236 225
---------------- ---------- -------- --------- --------- ----------- -------- --------
Provisions 4,420 1,065 (474) (1,673) 3,338 3,113 225
---------------- ---------- -------- --------- --------- ----------- -------- --------
The warranty provision is calculated by estimating the possible failure rates of the Group's hardware, with the exception of certain third party products which are covered by a third party warranty. The length of warranty period varies dependent on both the product and country it is sold to; this period can vary between one and five years.
12 Share-based payments
The terms and conditions of the share option schemes are provided in the consolidated financial statements for Promethean World Plc for the year ended 31 December 2014.
Share options
On 8 May 2014, 90,000 nil cost options were granted under the PRW CSOP with an exercise price of 32.125p per share.
On 10 September 2014, 1,330,000 nil cost options were granted under the PSP. Also on 10 September 2014, 8,370,000 equity settled and 804,500 cash settled options were granted under the PSP with an exercise price of 31.25p per share.
On 7 November 2014, 1,355,000 equity settled and 85,000 cash settled options were granted under the PSP with an exercise price of 27.0p per share.
The movements in the number of equity settled share options in issue during 2014 were as follows:
Options Options
in issue Granted Exercised/ in issue Option
at 1 January in the lapsed at 31 December price per
2014 year in year(1) 2014 share
(000s) (000s) (000s) (000s) (pence)
---------------------- -------------- -------- ------------ ---------------- --------------------
2009 Chalkfree
CSOP 364 - (100) 264 5.25
2010 Chalkfree
CSOP 523 - (109) 414 5.25
IPO Plan 89 - (43) 46 -
PRW CSOP - 2010 43 - (9) 34 125.00
PSP - 2011 1,903 - (1,214) 689 -
PRW CSOP - 2011 1,692 - (1,015) 677 59.75
PSP - 2012 deferred
SMT bonus 39 - (36) 3 -
PSP - April 2012 1,852 - (782) 1,070 -
PSP - October 2012 1,570 - - 1,570 -
PRW CSOP - April
2012 120 - (50) 70 51.63
PRW CSOP - October
2012 220 - (50) 170 17.37
PSP - Mar 2013 2,040 - (836) 1,204 -
PSP - June 2013 290 - (73) 217 -
PRW CSOP - Mar
2013 90 - - 90 16.25
PRW CSOP - June
2013 180 - - 180 12.88
PRW CSOP - 2014 - 90 - 90 32.13
PSP - Sept 2014 - 1,330 - 1,330 -
PSP - SARs(2) Sept
2014 - 8,370 - 8,370 31.25
PSP - SARs(2) Nov
2014 - 1,355 - 1,355 27.00
---------------------- -------------- -------- ------------ ---------------- --------------------
Total equity settled
options(3) 11,015 11,145 (4,317) 17,843 n/a
---------------------- -------------- -------- ------------ ---------------- --------------------
(1) During 2014, 2,052,000 options were exercised and 2,265,000 lapsed.
(2) Awards under the SARs (Stock Appreciation Rights) sub-plan are ultimately satisfied by the transfer of a number of ordinary shares equal to the gain on the award price as at the date of exercise of the award, subject to a cap of 75% of the number of shares awarded.
(3) Of the total options in issue as at 31 December 2014, 1,963,000 of them have vested and are exercisable.
12 Share-based payments (continued)
In addition to the equity settled share options in the table overleaf, as at 31 December 2014 the Group had 1,085,000 cash settled share options in issue (2013: 283,000 cash settled options).
Share-based payments charge
The share based payment charge for the year was GBP326,000 (2013: GBP876,000) comprising of GBP305,000 (2013: GBP866,000) in respect of equity settled awards and GBP21,000 (2013: GBP10,000) in respect of cash settled awards.
13 Accounts
The financial information set out above does not constitute the Group's statutory accounts for the year ended 31 December 2014 or 31 December 2013 but is derived from those accounts. Statutory accounts for Promethean World Plc for the year ended 31 December 2013 have been delivered to the Registrar of Companies, and those for the year ended 31 December 2014 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Copies of full accounts will be available on the Group's corporate website. Additional copies will be available on request from Promethean World Plc, Promethean House, Whitebirk Industrial Estate, Lower Philips Road, Blackburn, Lancashire, BB1 5TH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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