TIDMPRW
RNS Number : 9058V
Promethean World Plc
13 August 2015
For Immediate Release 13 August 2015
Promethean World Plc
Interim results for the six months ended 30 June 2015
Trading
In the period, activity in North America in the interactive
display market has been concentrated towards the end of Q2 with
some large ActivPanel contract awards, of which only a small
proportion shipped in H1. In the International region, revenue is
ahead of the prior year comparator, driven by growth in the UK and
Europe.
Recommended offer to acquire Promethean World Plc
On 10 July 2015, the Boards of NetDragon Websoft Inc.
("NetDragon") and Promethean World Plc announced that they had
reached agreement regarding the terms of a recommended cash offer
for Promethean by Digital Train Limited, an indirect non
wholly-owned subsidiary of NetDragon, pursuant to which Digital
Train Limited would offer to acquire the entire issued and to be
issued ordinary share capital of Promethean.
Under the terms of, and subject to the conditions of, the Offer,
Promethean shareholders will be entitled to receive 40 pence in
cash for each Promethean share which values the fully diluted share
capital of Promethean at approximately GBP84.1 million.
Enquiries
+ 44 (0) 1254
Promethean World Plc 290749
Jim Marshall, Chief Executive
Officer
Ian Baxter, Chief Financial
Officer
+ 44 (0) 20
Citigate Dewe Rogerson Consultancy 7638 9571
+ 44 (0) 7973
Anthony Carlisle 611 888
Operating and financial review
Revenues
First half Group revenues were GBP52.8m (H1 2014: GBP57.7m).
By product segment, interactive display systems revenues for the
Group were GBP51.0m (H1 2014: GBP54.6m). Learner response system
(LRS) revenues for the first-half were GBP1.8m (H1 2014: GBP3.1m).
Sales volumes and average selling prices for the Group were as
follows:
H1 2015 H1 2014
---------------------------------------- ------- -------
Volumes
Interactive Display Systems 45,571 57,370
Learner Response Systems and Assessment 93,184 140,544
---------------------------------------- ------- -------
Average Selling Prices (GBP)
Interactive Display Systems 1,119.8 951.3
Learner Response Systems and Assessment 19.1 22.2
---------------------------------------- ------- -------
North America
In North America, first half revenues were GBP30.2m (H1 2014:
GBP36.5m). The North American region represented 57.3% of Group
revenues in the period (H1 2014: 63.2%).
North American interactive display system revenues were GBP29.2m
(H1 2014: GBP33.9m). Sales volumes of interactive display systems
were 16,445 (H1 2014: 25,952). The 2014 comparator included initial
shipments of ActivBoard Touch displays under the Miami-Dade
contract, whereas in H1 2015 the product mix has been more heavily
weighted towards the ActivPanel. Consequently, North American ASPs
for interactive displays have increased significantly in H1 2015 to
GBP1,774 (H1 2014: GBP1,305).
As anticipated, the market for dedicated LRS devices in North
America continues to contract due to the rollout of disparate
devices into classrooms, in particular tablets and Chromebooks.
North American LRS revenues were GBP1.1m (H1 2014: GBP2.6m).
International
In the International region, which includes everywhere outside
of North America, first half revenue was GBP22.6m (H1 2014:
GBP21.2m), due to growth in the UK and Ireland and Continental
Europe versus the comparative period.
Sales of interactive display systems in the International region
were GBP21.8m (H1 2014: GBP20.7m) despite a reduction in sales
volumes from 31,418 in H1 2014 to 29,126 in H1 2015. The
International ASP improved to GBP750 (H1 2014: GBP659) due to a
combination of changes in country and product mix in comparison to
the prior period.
LRS revenues increased to GBP0.7m (H1 2014: GBP0.5m), with
handset sales volumes up 20.2% in the first-half of the year versus
the comparator period.
Gross profit
During the first half of the year, Promethean's gross profit was
GBP14.7m versus GBP18.0m in H1 2014, reflecting the overall drop in
both revenues and gross margin.
Gross margin in the first-half was 27.9% (H1 2014: 31.2%),
impacted by a regional mix more heavily weighted to the
International region and a product mix that included a greater
number of interactive flat panels, typically lower margin but a
higher ASP than the equivalent interactive whiteboard. H1 margins
were also suppressed by a reduction in LRS revenues and the impact
of fixed production costs being spread over a lower level of
revenues. These factors were partially offset by increased margin
from higher sales of interactive lesson content.
Gross profit for North America was GBP9.6m in H1 2015 (H1 2014:
GBP11.4m), primarily reflecting the reduction in revenue, while
gross margin was stable at 31.7% (H1 2014: 31.3%).
Gross profit for International was GBP5.1m (H1 2014: GBP6.6m)
and gross margin was 22.7% (H1 2014: 31.2%). Gross margin was
impacted by both the change in product mix, now more heavily
weighted to interactive flat panels, and the resulting increase in
the cost of goods sold (which are primarily USD costs) due to
relative strength of the USD in H1 2015 versus H1 2014.
Operating expenses and Research & Development
Operating expenses, excluding exceptional items, share-based
payments, depreciation and amortisation, were GBP19.0m (H1 2014:
GBP19.7m). Group sales and marketing expenses reduced by GBP0.7m to
GBP13.0m. Administrative expenses were broadly stable at
GBP4.2m.
Total gross research and development expenditure (before amounts
capitalised) was GBP7.1m versus GBP6.3m in the first half of 2014.
Net of capitalised expenditure, research and development costs were
GBP1.8m (H1 2014: GBP1.9m).
There were two releases of ClassFlow(TM) in the first half of
2015, ClassFlow(TM) 2.5 in January and the most recent update,
ClassFlow(TM) 3.0, released in May, which expands functionality to
manage teaching and learning both inside and outside of the
classroom. As of 30 June 2015, ClassFlow(TM) was available in 21
languages with registrants in 68 countries.
Exceptional items
In H1 2015, an exceptional credit of GBP0.4m has been recognised
in respect of a trade receivable that had been fully provided for
in a prior period. A further credit of GBP0.1m has been recognised
following the finalisation of liabilities relating to certain
onerous leases.
In H1 2014, exceptional costs of GBP1.1m were incurred primarily
in streamlining the management structure. An exceptional credit of
GBP0.6m was also recognised from the partial release of a prior
year trade receivable impairment provision.
EBITDA and EBIT
Adjusted EBITDA excludes exceptional costs and share-based
payments and was a loss of GBP4.3m in H1 2015 compared to a loss of
GBP1.7m in H1 2014. Depreciation and amortisation reduced from
GBP4.0m in H1 2014 to GBP3.1m in H1 2015.
Adjusted EBIT was a loss of GBP7.3m in H1 2015 compared to a
loss of GBP5.7m in H1 2014.
Interest and tax
The Group had net finance income of GBP0.2m (H1 2014: GBP0.8m
net financial income), primarily comprising of foreign exchange
gains (GBP0.6m) and bank interest and commitment fees
(GBP0.4m).
The Group's consolidated effective tax rate for H1 2015 was
-2.0% (H1 2014: 23.5%) based on the estimate of the full year
current tax applicable to non-UK subsidiaries, partially offset by
UK R&D tax credits. In respect of the UK business, and
consistent with the assumptions applied for the year ended 31
December 2014, no further deferred tax asset has been recognised in
the period.
Cash flow
As at 30 June 2015, the Group had a net debt balance of GBP6.5m
(30 June 2014: net cash of GBP9.2m), GBP11.2m lower than at 31
December 2014 (net cash of GBP4.7m), due to a GBP5.6m operating
cash outflow in the period and the continued investment in new
product development.
Recommended offer to acquire Promethean World Plc
On 10 July 2015, the Boards of NetDragon Websoft Inc.
("NetDragon") and Promethean World Plc announced that they had
reached agreement regarding the terms of a recommended cash offer
for Promethean by Digital Train Limited, an indirect non
wholly-owned subsidiary of NetDragon, pursuant to which Digital
Train would offer to acquire the entire issued and to be issued
ordinary share capital of Promethean.
Under the terms of, and subject to the conditions of, the Offer,
Promethean Shareholders will be entitled to receive 40 pence in
cash for each Promethean Share which values the fully diluted share
capital of Promethean at approximately GBP84.1 million.
Dividend
The Board is not in the position to pay an interim dividend
(2014: nil).
Risks and uncertainties
The Group faces a number of risks and uncertainties which could
have a material impact upon its long-term performance. These risks
are both internal and external. The Board has an established set of
processes which assists in the identification, evaluation and
management of these risks.
The principal risks and uncertainties facing the Group at 30
June 2015 are consistent with those set out on pages 10 to 13 of
the Annual Report and Accounts 2014 (a copy of which is available
from the investor section of the Group's website
www.prometheanworld.com). These risks remain valid as regards their
potential to impact the Group. No new significant risks have been
identified during the current period.
Going concern
The Group meets its day-to-day working capital requirements
through operating cash flows, supplemented if required by an asset
backed lending facility. The effects of the trading performance in
H1 and the seasonal trading cycle in which the Group operates, have
resulted in the need to draw down on the facility during the
period. The Directors have considered the future availability of
the facility and levels of headroom to the facility limit in making
their assessment of going concern. The Directors have prepared cash
flow projections for the period to December 2016 which shows that
the Group is capable of continuing to operate within its facilities
including in the event that reasonably possible changes in trading
occur and mitigating actions are taken by management.
On the basis of the above, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the forseeable future. Accordingly the
going concern basis of accounting continues to be adopted in
preparing the interim financial statements.
Forward looking statements
The information in this release is based on management
information.
This report 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.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Approved by the Board and signed on its behalf by
Jim Marshall
Chief Executive Officer
12 August 2015
The Directors who served during the period were:
Philip Rowley Chairman
Jim Marshall Chief Executive Officer
Ian Baxter Chief Financial Officer
Lord Puttnam Senior Independent Director
Graham Howe Non-Executive Director
Judy Verses Non-Executive Director
Jackie Yeaney Non-Executive Director
Condensed consolidated statement of profit or loss
For the period ended
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
Note GBP000 GBP000 GBP000
----------------------------------- ---- -------- -------- -----------
Revenue 5 52,805 57,690 118,174
Cost of sales (38,085) (39,669) (80,477)
----------------------------------- ---- -------- -------- -----------
Gross profit 5 14,720 18,021 37,697
Operating expenses (21,930) (24,467) (45,599)
----------------------------------- ---- -------- -------- -----------
Analysis of results from operating
activities:
(Loss)/earnings before interest,
tax, depreciation, amortisation,
exceptional costs and share-based
payments (4,274) (1,691) 839
Depreciation and amortisation (3,059) (4,013) (7,934)
Exceptional costs 6 - (1,138) (1,932)
Exceptional income 6 552 587 1,451
Share-based payments 13 (429) (191) (326)
----------------------------------- ---- -------- -------- -----------
Results from operating activities (7,210) (6,446) (7,902)
----------------------------------- ---- -------- -------- -----------
Finance income 7 699 1,044 20
Finance expense 7 (464) (236) (1,766)
----------------------------------- ---- -------- -------- -----------
Net finance income/(expense) 235 808 (1,746)
----------------------------------- ---- -------- -------- -----------
Loss before income tax (6,975) (5,638) (9,648)
Income tax (expense)/credit 8 (139) 1,327 (6,854)
----------------------------------- ---- -------- -------- -----------
Loss for the period (1) (7,114) (4,311) (16,502)
----------------------------------- ---- -------- -------- -----------
Loss per share
Basic loss per share (pence) 12 (3.49) (2.15) (8.17)
Diluted loss per share (pence) 12 (3.49) (2.15) (8.17)
----------------------------------- ---- -------- -------- -----------
(1) All attributable to Equity shareholders and is entirely from
continuing operations.
Condensed consolidated statement of profit or loss and other
comprehensive income
For the period ended
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
----------------------------------------- -------- -------- -----------
Loss for the period from the income
statement (7,114) (4,311) (16,502)
Foreign currency translation differences
- foreign operations 164 (600) 1,182
Net (loss)/gain on net investments
in foreign operations (713) (774) 694
Total comprehensive loss for the
period (1) (7,663) (5,685) (14,626)
----------------------------------------- -------- -------- -----------
(1) All attributable to Equity shareholders and is entirely from
continuing operations.
Condensed consolidated statement of financial position
Registered number 7118000
As at
30 June 30 June 31 December
2015 2014 2014
Note GBP000 GBP000 GBP000
--------------------------------- ---- --------- --------- -----------
Assets
Property, plant and equipment 6,723 7,564 7,534
Intangible assets 10 21,524 15,728 18,141
Deferred tax assets 2,326 10,030 2,364
--------------------------------- ---- --------- --------- -----------
Total non-current assets 30,573 33,322 28,039
--------------------------------- ---- --------- --------- -----------
Inventories 13,605 10,707 12,007
Derivative financial instruments 187 216 105
Trade and other receivables 27,801 27,597 22,672
Current tax assets 1,004 832 1,216
Cash and cash equivalents 1,572 9,162 4,706
--------------------------------- ---- --------- --------- -----------
Total current assets 44,169 48,514 40,706
--------------------------------- ---- --------- --------- -----------
Total assets 74,742 81,836 68,745
--------------------------------- ---- --------- --------- -----------
Liabilities
Trade and other payables (34,031) (31,523) (28,119)
Loans and borrowings 11 (7,592) - -
Provisions (2,784) (3,667) (3,113)
Current tax liabilities (757) (861) (665)
--------------------------------- ---- --------- --------- -----------
Total current liabilities (45,164) (36,051) (31,897)
--------------------------------- ---- --------- --------- -----------
Provisions (219) (321) (225)
Total non-current liabilities (219) (321) (225)
--------------------------------- ---- --------- --------- -----------
Total liabilities (45,383) (36,372) (32,122)
--------------------------------- ---- --------- --------- -----------
Net assets 29,359 45,464 36,623
--------------------------------- ---- --------- --------- -----------
Equity
Share capital 20,320 20,320 20,320
Share premium 99,796 99,796 99,796
Capital reserve 93,990 93,990 93,990
Translation reserve (FCTR) 5,461 2,760 6,010
Retained earnings (190,208) (171,402) (183,493)
--------------------------------- ---- --------- --------- -----------
Total equity (all attributable
to equity holders of the Company) 29,359 45,464 36,623
--------------------------------------- --------- --------- -----------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2014
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 period
Loss for the period - - - - (4,311) (4,311)
----------------------------- ------- ------- ------- ----------- --------- -------
Foreign currency translation
differences - - - (600) - (600)
Net loss on net investment
in foreign operations - - - (774) - (774)
Total other comprehensive
income - - - (1,374) - (1,374)
----------------------------- ------- ------- ------- ----------- --------- -------
Total comprehensive
loss for the period - - - (1,374) (4,311) (5,685)
----------------------------- ------- ------- ------- ----------- --------- -------
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) - - - - 136 136
----------------------------- ------- ------- ------- ----------- --------- -------
Total contributions
by and distributions
to owners 320 - - - (184) 136
----------------------------- ------- ------- ------- ----------- --------- -------
Balance at 30 June 2014 20,320 99,796 93,990 2,760 (171,402) 45,464
----------------------------- ------- ------- ------- ----------- --------- -------
Condensed consolidated statement of changes in equity
For the year to 31 December 2014
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
loss 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
------------------------------ --------- --------- --------- ------------ ---------- ---------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2015
Share Share Capital Translation Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------- ------- ------- ----------- --------- -------
Balance at 1 January
2015 20,320 99,796 93,990 6,010 (183,493) 36,623
----------------------------- ------- ------- ------- ----------- --------- -------
Total comprehensive
income for the period
Loss for the period - - - - (7,114) (7,114)
----------------------------- ------- ------- ------- ----------- --------- -------
Foreign currency translation
differences - - - 164 - 164
Net loss on net investment
in foreign operations - - - (713) - (713)
Total other comprehensive
income - - - (549) - (549)
----------------------------- ------- ------- ------- ----------- --------- -------
Total comprehensive
loss for the period - - - (549) (7,114) (7,663)
----------------------------- ------- ------- ------- ----------- --------- -------
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Share-based payments
(net of tax) - - - - 399 399
----------------------------- ------- ------- ------- ----------- --------- -------
Total contributions
by and distributions
to owners - - - 399 399
----------------------------- ------- ------- ------- ----------- --------- -------
Balance at 30 June 2015 20,320 99,796 93,990 5,461 (190,208) 29,359
----------------------------- ------- ------- ------- ----------- --------- -------
Condensed consolidated statement of cash flows
For the period ended
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
Note GBP000 GBP000 GBP000
---------------------------------------------------- ---- -------- -------- -----------
Cash flows from operating activities
Loss for the period (7,114) (4,311) (16,502)
Adjustments for:
Depreciation 1,125 1,165 2,515
Amortisation of intangible assets 1,934 2,848 5,419
Impairment losses on trade receivables - - 286
Reversal of exceptional impairment losses on
trade receivables receivable (421) (587) (977)
Loss on sale of property, plant and equipment 3 57 52
Net finance (income)/expense (235) (808) 1,746
Income tax expense/(credit) 139 (1,327) 6,854
Share-based payments 429 191 326
---------------------------------------------------- ---- -------- -------- -----------
(4,140) (2,772) (281)
Change in inventories (1,781) (2,234) (2,806)
Change in trade and other receivables (5,704) (3,025) 2,890
Change in trade and other payables 7,436 4,925 392
Change in provisions (336) (431) (1,081)
---------------------------------------------------- ---- -------- -------- -----------
Cash used in operations (4,525) (3,537) (886)
Finance cost (paid)/received (1,411) 961 447
Income tax received/(paid) 160 (356) (978)
Cash inflow from settlement of derivatives 202 207 461
---------------------------------------------------- ---- -------- -------- -----------
Net cash outflow from operating activities (5,574) (2,725) (956)
---------------------------------------------------- ---- -------- -------- -----------
Cash flows from investing activities
Finance income received 2 15 20
Proceeds from sale of property, plant and equipment 1 82 92
Acquisition of property, plant and equipment (341) (1,248) (2,285)
Development expenditure 10 (5,317) (4,357) (9,797)
Net cash used in investing activities (5,655) (5,508) (11,970)
---------------------------------------------------- ---- -------- -------- -----------
Cash flows from financing activities
Proceeds from loans and borrowings 11 8,089 - -
Net cash from financing activities 8,089 - -
---------------------------------------------------- ---- -------- -------- -----------
Net decrease in cash and cash equivalents (3,140) (8,233) (12,926)
Cash and cash equivalents at 1 January 4,706 17,591 17,591
Exchange rate effects 6 (196) 41
---------------------------------------------------- ---- -------- -------- -----------
Cash and cash equivalents at period end 1,572 9,162 4,706
---------------------------------------------------- ---- -------- -------- -----------
Notes
To the condensed interim financial statements
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, Lower Philips Road, Blackburn, Lancashire BB1
5TH.
The condensed interim consolidated financial statements of the
Company as at and for the six months ended 30 June 2015 comprises
of the Company and its subsidiaries (together referred to as the
"Group" and individually as "Group Entities").
The Group's Promethean brand is a world 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,
ActivExpression) and its specialised teaching software
(ActivInspire, ActivEngage and ClassFlow(TM) ).
Promethean also provides comprehensive training and support and,
now with over 2.2 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.
2 Statement of compliance
These condensed consolidated interim financial statements of
Promethean World Plc have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting as
adopted by the EU. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of
Promethean World Plc as at 31 December 2014 which have been
prepared in accordance with IFRSs as adopted by the EU.
The comparative figures for the year ended 31 December 2014 are
not the Group's statutory accounts for that financial year. Those
accounts have been reported upon by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors
was (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.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 12 August 2015.
3 Accounting policies
These condensed consolidated interim financial statements of
Promethean World Plc have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting as
adopted by the EU.
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of Promethean
World Plc's published consolidated financial statements for the
year ended 31 December 2014.
Changes in accounting policy
There has been no impact during the period to 30 June 2015
resulting from new accounting standards or amendments to existing
accounting standards that became effective for the Group from 1
January 2015.
Going concern
The Group meets its day-to-day working capital requirements
through operating cash flows, supplemented if required by an asset
backed lending facility. The effects of the trading performance in
H1 and the seasonal trading cycle in which the Group operates, have
resulted in the need to draw down on the facility during the
period. The Directors have considered the future availability of
the facility and levels of headroom to the facility limit in making
their assessment of going concern. The Directors have prepared cash
flow projections for the period to December 2016 which shows that
the Group is capable of continuing to operate within its facilities
including in the event that reasonably possible changes in trading
occur and mitigating actions are taken by management.
On the basis of the above, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the forseeable future. Accordingly the
going concern basis of accounting continues to be adopted in
preparing the interim financial statements.
4 Estimates
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements of Promethean World Plc as at and
for the year ended 31 December 2014.
5 Operating segments
There are two reportable segments identified by the Group, based
on the destination of sales, North America and International, and
they do not arise as a result of an aggregation process. The North
America business segment consists of the United States, Canada and
the Caribbean. The International business segment consists of the
UK & Ireland, Continental Europe and the Rest of the World.
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 business segment.
Disclosures of segment performance are provided in the tables
overleaf:
Reportable segment revenue
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
----------------------------------------- -------- -------- -----------
North America 30,249 36,476 65,907
International 22,556 21,214 52,267
----------------------------------------- -------- -------- -----------
52,805 57,690 118,174
----------------------------------------- -------- -------- -----------
Reportable segment profit (gross profit)
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
----------------------------------------- -------- -------- -----------
North America 9,602 11,406 21,845
International 5,118 6,615 15,852
----------------------------------------- -------- -------- -----------
14,720 18,021 37,697
----------------------------------------- -------- -------- -----------
Reconciliation to loss before income tax
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------- -------- -------- -----------
Reportable segmental profit (gross profit) 14,720 18,021 37,697
Sales and marketing expenses (13,000) (13,660) (26,595)
Administrative expenses (4,195) (4,108) (7,051)
Research and development (net) (1,799) (1,944) (3,212)
------------------------------------------- -------- -------- -----------
Adjusted EBITDA (4,274) (1,691) 839
Depreciation and amortisation costs (3,059) (4,013) (7,934)
------------------------------------------- -------- -------- -----------
Adjusted operating loss (7,333) (5,704) (7,095)
Exceptional costs(1) - (1,138) (1,932)
Exceptional income(1) 552 587 1,451
Share-based payments (429) (191) (326)
Net finance income/(expense) 235 808 (1,746)
------------------------------------------- -------- -------- -----------
Loss before income tax (6,975) (5,638) (9,648)
------------------------------------------- -------- -------- -----------
(1) Further details of the exceptional items are disclosed in
note 6.
Further analysis of the Group's revenues by type of product is
provided below:
Revenue by product
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
---------------------------------------------------- -------- -------- -----------
Interactive display systems and accessories 51,029 54,576 112,647
Learner Response Systems & Assessment (LRSA) 1,776 3,114 5,527
---------------------------------------------------- -------- -------- -----------
52,805 57,690 118,174
---------------------------------------------------- -------- -------- -----------
Interactive display systems and accessories revenue
by region
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
---------------------------------------------------- -------- -------- -----------
North America 29,180 33,865 61,901
International 21,849 20,711 50,746
---------------------------------------------------- -------- -------- -----------
51,029 54,576 112,647
---------------------------------------------------- -------- -------- -----------
Learner Response Systems & Assessment revenue by
region
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
---------------------------------------------------- -------- -------- -----------
North America 1,069 2,611 4,006
International 707 503 1,521
---------------------------------------------------- -------- -------- -----------
1,776 3,114 5,527
---------------------------------------------------- -------- -------- -----------
Seasonality
In addition to economic factors, the Group's revenues are
subject to seasonal fluctuation during the key buying seasons in
the United States, which runs from June to September, and in
International markets. As a result, the Directors consider that
there is an impact on performance of the Group when comparing first
half results to those achieved in the second half.
6 Exceptional items
In H1 2015, an exceptional credit of GBP0.4m has been recognised
in respect of a trade receivable that had been fully provided for
in a prior period. A further credit of GBP0.1m has been recognised
following the finalisation of liabilities relating to certain
onerous leases.
In H1 2014, exceptional costs of GBP1.1m were incurred primarily
in streamlining the management structure. An exceptional credit of
GBP0.6m was also recognised from the partial release of a prior
year trade receivable impairment provision.
7 Finance income and expense
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------------- -------- -------- -----------
Interest on bank deposits 2 15 20
Net change in the fair value of financial assets
at fair value through
profit or loss 82 53 -
Foreign exchange gains 615 976 -
------------------------------------------------- -------- -------- -----------
Finance income 699 1,044 20
------------------------------------------------- -------- -------- -----------
Interest expense on bank and other loans (354) (126) (254)
Debt issue costs amortised (110) (110) (221)
Foreign exchange losses - - (1,233)
Net change in the fair value of financial assets
at fair value through
profit or loss - - (58)
------------------------------------------------- -------- -------- -----------
Finance expense (464) (236) (1,766)
------------------------------------------------- -------- -------- -----------
Net finance income/(expense) 235 808 (1,746)
------------------------------------------------- -------- -------- -----------
The changes in fair value of financial assets at fair value
through profit or loss result from the movements during the period
in the mark to market valuation of the Group's outstanding foreign
currency instruments, which are valued in accordance with level 2
methodology.
8 Income tax expense
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
---------------------------------- -------- -------- -----------
Current tax expense (139) (446) (961)
Deferred tax credit/(expense) - 1,773 (5,893)
---------------------------------- -------- -------- -----------
Total income tax (expense)/credit (139) 1,327 (6,854)
---------------------------------- -------- -------- -----------
Current tax has been recognised as a proportion of management's
estimate of the charge for the year. No deferred tax has been
recognised in the period, consistent with the assumptions applied
for the year ended 31 December 2014. The Group's consolidated
reported tax rate for the six months ended 30 June 2015 was -2.0%
(six months ended 30 June 2014: 23.5%).
In the prior period, deferred tax was recognised in respect of
UK trading losses, which was consistent with the assumptions
applied for the year ended 31 December 2013.
9 Dividends
The Directors are not in a position to pay an interim dividend
for the six months to 30 June 2015 (2014: GBPnil).
10 Intangible assets
The movements in the net book value of the Group's intangible
assets in the six months to 30 June 2015 were as follows:
Development
costs
GBP000
------------------------------------ -----------
Net book value as at 1 January 2015 18,141
Additions 5,317
Amortisation for the period (1,934)
Net book value as at 30 June 2015 21,524
------------------------------------ -----------
Net book value as at 30 June 2014 15,728
------------------------------------ -----------
11 Loans and borrowings
As at 30 June 2015, the Group had bank borrowings of
GBP8,089,000 (30 June 2014: GBPnil). In the statement of financial
position, this liability is stated net of prepaid bank fees of
GBP497,000.
12 Loss per share
Basic loss per share
The calculation of basic loss 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
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
---------------------------------------------------------- -------- -------- -----------
Loss for the period attributable to ordinary shareholders (7,114) (4,311) (16,502)
---------------------------------------------------------- -------- -------- -----------
Weighted average number of ordinary shares
In thousands of shares
Issued ordinary shares at 1 January 203,200 200,000 200,000
Effect of ordinary shares issued in the period - 1,715 2,464
Effect of treasury shares held (1,407) (1,830) (1,785)
Effect of dilutive vested share options not yet exercised 1,898 1,012 1,390
---------------------------------------------------------- -------- -------- -----------
Weighted average number of ordinary shares at period
end 203,691 200,897 202,069
---------------------------------------------------------- -------- -------- -----------
Basic loss per share (pence) (3.49) (2.15) (8.17)
---------------------------------------------------------- -------- -------- -----------
Diluted loss per share
The calculation of diluted loss per share at 30 June 2015 was
based on loss attributable to ordinary shareholders as disclosed
below, and a weighted average number of ordinary shares outstanding
calculated as follows:
6 months 6 months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
----------------------------------- -------- -------- -----------
Loss for the period attributable
to ordinary shareholders (7,114) (4,311) (16,502)
----------------------------------- -------- -------- -----------
Weighted average number of shares
(basic) 203,691 200,897 202,069
Effect of conversion of Promethean
World Plc share options - - -
----------------------------------- -------- -------- -----------
Weighted average number of shares
(diluted) 203,691 200,897 202,069
----------------------------------- -------- -------- -----------
Diluted loss per share (pence) (3.49) (2.15) (8.17)
----------------------------------- -------- -------- -----------
No adjustment has been made to the weighted average number of
shares for the purpose of the diluted earnings per share
calculation as the effect would be anti-dilutive.
13 Share-based payments
The terms and conditions of the share option schemes in place at
30 June 2015 are provided in the consolidated financial statements
for Promethean World Plc as at 31 December 2014.
On 20 February 2015, 130,000 equity settled options were granted
under the PSP SARs with an exercise price of 23.25p per share.
The terms and conditions of the award are consistent with those
described in the consolidated financial statements for Promethean
World Plc as at 31 December 2014.
14 Related parties
There have been no other related party transactions or changes
to the nature of related party transactions previously described in
the 2014 consolidated financial statements of Promethean World Plc
that could have a material effect on the financial position or
performance of the Group in the period.
Independent Review Report by KPMG LLP to Promethean World
Plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2015 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes
in equity, the condensed consolidated statement of cash flows and
the related explanatory notes. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the Company those
matters we are required to state to it in this 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 conclusions we
have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2015 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Stuart Burdass
For and on behalf of KPMG LLP
Chartered Accountants
One St Peter's Square
Manchester
M2 3AE
12 August 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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