TIDMPRW
RNS Number : 7386Y
Promethean World Plc
27 February 2013
27 February 2013
Promethean World Plc: Preliminary results for the year ending 31
December 2012
-- Continued education budgetary pressures
-- Cost reduction programme delivered
-- Building on our software platform
Financial results
-- Revenue GBP157.0m (2011: GBP222.9m) down 29.6% (down 29.4% on a constant currency basis)
-- Full year operating costs(1) down 18.5% to GBP52.5m(2011:
GBP64.5m). H2 operating costs down 37.5% to GBP19.8m (H2 2011:
GBP31.8m)
-- Adjusted EBITDA(1) GBP5.1m (2011: GBP31.1m)
-- Adjusted operating loss(2) GBP5.5m (2011: profit GBP23.4m)
-- Exceptional items (including H1 non-cash goodwill impairment of GBP140.5m) of GBP158.4m
-- Pro forma net loss(2,3) GBP3.8m (2011: net income GBP16.4m)
-- Strong working capital management - inventory GBP15.4m at 31
December 2012 (GBP26.2m at 30 June 2012)
-- Net cash GBP8.0m as at 31 December 2012 (2011: GBP21.8m)
Business Highlights
-- Active pipeline to broaden range of products and services
o Promethean Tablet with ActivEngage software and a new touch
display system previewed at BETT 2013
-- Increased focus on software services
o Broadening hardware assessment offering using Promethean
ActivEngage
o ActivInspire software unbundling to drive recurring
maintenance revenues
o Licensing deals signed with third party providers of
interactive projectors
o Planet for schools rollout commenced for up to 100,000
teachers in Mexico
-- Promethean Planet membership up 28.1% to over 1.5 million members
(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:
"Market conditions, particularly in the US and Europe, were
tough throughout 2012 and continue to be so, with education budgets
remaining under pressure and increased competition for interactive
hardware technology. This is reflected in our results for the year.
Against this backdrop, we maintained strong cash management and
took rapid action to implement a cost reduction programme and
streamline our operations. This programme was delivered within time
and beyond expectations. Full year operating costs were down 18.5%
and, in the second half, they were down 37.5%. The full benefits of
these cost reductions will be felt in 2013. In the second half of
2012, we remained broadly cash neutral whilst undertaking our cost
reduction programme.
"In making these cost reductions, we have protected our core
R&D investment in order to maintain our strong record of
innovation. Promethean is responding to a rapidly changing market
with multiple initiatives to build on our presence as an education
solutions provider with a strong position in both hardware and in
the applications and infrastructure software arenas. It will take
time for the impact of our software initiatives to be felt and 2013
will be a year of transition in this respect.
"Over time, we believe that governments and school districts
will increase the priority they give to learning productivity and,
as the evidence of its benefits keeps building, interactive
learning technology will become ubiquitous in schools. For 2013,
however, we expect market conditions to remain tough. We will
therefore continue managing our business prudently to protect our
profitability and cash flows."
Analyst presentation
A briefing to analysts will take place at 08:30 on Wednesday 27
February 2013 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.
Enquiries
Promethean World Plc + 44 (0) 1254 290749
Jim Marshall, Chief Executive Officer
Neil Johnson, Chief Financial Officer
Citigate Dewe Rogerson Consultancy + 44 (0) 20 7638 9571
Anthony Carlisle + 44 (0) 7973 611888
Business Performance
GBPm unless stated 2012 2011
----------------------------------------------- ------- ------
Revenue: as reported 157.0 222.9
Revenue: constant currency 157.0 222.4
Adjusted EBITDA(1) 5.1 31.1
Adjusted operating (loss)/profit(2) (5.5) 23.4
Adjusted operating margin(2) (3.5)% 10.5%
Pro forma net (loss)/income(2,3) (3.8) 16.4
Pro forma basic earnings per share(2,3,4) (p) (1.90) 8.23
Total dividend per share (p) nil 2.50
(4) calculated using the weighted average number of ordinary shares per the Basic earnings
per share calculation.
Results under IFRS
GBPm unless stated 2012 2011
--------------------------------------------------- -------- ------
Revenue 157.0 222.9
Goodwill impairment - exceptional cost (non-cash) (140.5) -
Operating (loss)/profit (165.9) 17.4
Operating margin N/a 7.8%
Net (loss)/income (159.8) 11.2
Basic (loss)/earnings per share (p) (80.10) 5.59
Cash flow
GBPm unless stated 2012 2011
------------------------------- --------- ------
Free cash (outflow)/inflow(5) (5.3) 18.0
Free cash flow conversion (%) (104.5)% 57.9%
Net cash as at 31 December 8.0 21.8
(5) defined as Adjusted EBITDA less capital expenditure and changes in working capital excluding
exceptional provisions
Key metrics
2012 2011
--------------------------------------- ---------- ----------
Volumes
Interactive display systems 134,367 182,791
Learner response system handsets 581,103 905,529
Average Selling Prices (GBP)
Interactive display systems 1,036 1,074
Learner response system handsets 30.6 29.4
Promethean Planet (as at 31 December)
Members 1,530,432 1,194,310
Resources 68,335 50,484
Operational review
Austerity measures continue to impact education budgets,
particularly in the US, Promethean's major market, and in Europe.
Funding for interactive education technology is therefore being
squeezed in many countries and, as a consequence, Group revenues
for the year were GBP157.0m, 29.6% below 2011.
As teachers' salaries and facility costs are relatively fixed in
nature, education budgetary pressures have significantly impacted
the level of investment in interactive education technology.
Competition in the technology market has also increased with the
advent of tablet technology, particularly in the US, giving impetus
to one-to-one device initiatives in certain districts and schools.
This is complementary to Promethean's solutions, since leading
tablet devices can work in conjunction with Promethean's
interactive display systems and software. However, in the short
term, it has impacted the level of available funding for other
interactive technology.
Promethean has reacted to the market conditions by reorganising
and streamlining our business, gaining efficiencies and reducing
operating costs. Secondly, we have actively introduced products and
sales initiatives to highlight our value-for-money proposition and
ability to compete across the price range. Thirdly, we have
increased our focus on our software strategy.
We have reduced our operating cost base to improve profitability
and to ensure that Promethean can be cash positive in the current
market environment. Excluding exceptional items and net of
capitalised R&D, our 2012 operating costs were down 18.5% to
GBP52.5m versus GBP64.5m in 2011 and, in the second half, were down
37.5% at GBP19.8m compared with GBP31.8m in 2011. The full benefit
of our cost reductions will be realised in 2013. While making our
cost reductions, however, we have protected our core R&D
investments to ensure we maintain our strong record of innovation.
As part of our reorganisation, we merged the Business &
Government activities into our existing North American and
International sales regions.
In 2012, we launched the ActivTable, to extend our portfolio to
collaborative learning, providing a 46" multi-touch, multi-user HD
LCD interactive table for up to six students simultaneously. This
began shipping in H2 2012 with encouraging initial customer
reactions and levels of purchase.
We signed an agreement to roll ActivProgress out to up to
300,000 Mexican students across a number of states. Following the
elections, implementation is anticipated to re-start this year,
subject to individual States' and central government budget
re-approval.
We launched Planet for Schools, providing a private Promethean
Planet community for up to 100,000 teachers in Mexico and are
engaged in discussions to provide a similar service to other
potential customers.
The first lesson resources created from our partnership with
Houghton Mifflin Harcourt were launched in H2 2012 and the Parent
Connection, a new programme to deliver daily Channel One News
InterActiv broadcasts shown in the classroom directly to parents'
smartphones, was announced during H2 2012 and will launch early in
2013.
For 2013, we have established a pipeline of equipment and
software product launches, which will widen our product portfolio
and strengthen our software position. At BETT, this January, we
previewed our ActivTablet, which will become our high-end learner
response device, using ActivEngage software but with the
versatility to run other third party applications, and a new
interactive touch board, to enable us to compete more keenly on
price in emerging markets. We also recently signed licensing
agreements for our award-winning ActivInspire software to selected
providers of interactive projectors and an alliance with Microsoft
to develop a new suite of solutions to provide a new collaborative
classroom-based learning environment.
Our focus on software is increasing. In their work, teachers
prepare lessons and lesson materials, teach, test and assess the
tests and give personalised learning. We are automating this work
flow, so that teachers can focus on what they like and do best -
teaching. In the process, we are enhancing their productivity and
we are providing feedback to pupils and parents on a student's
progress.
We are building an ecosystem of solutions to deliver interactive
classroom technology, digital interactive content and a
personalised learning platform, coupled with the analysis of
student data. We are linking this directly with our enterprise
level software, to store, aggregate and enable analysis of the data
at school, district and country levels, so that educators can gain
a true understanding of what works and what doesn't. In North
America alone, we estimate that the size of the addressable segment
of the K-12 software market is approximately $1.5 billon per
annum.
In parallel, we are using our enterprise level software to
provide an online collaborative community platform and central
store of teaching assets, standardised and aligned to the curricula
in different territories, which teachers can access locally - this
is what Planet for Schools does.
Historically, we have bundled our ActivInspire software with our
hardware devices. We are now making it available through licence
agreements for use on selected certified non-Promethean devices.
Since the year end, we have recently signed the first ActivInspire
licensing deals with interactive projector manufacturers, which
will enable the software to reach a broader customer base. In
future, we will also make transparent the value of the software
being bundled with our hardware and move to a practice of providing
and charging for maintenance and upgrades. Over time, it will build
a recurring maintenance revenue stream.
Financial overview
Group revenues for the year were GBP157.0m, 29.6% below 2011,
due to difficult market conditions. North America accounted for
52.7% (2011: 58.2%) of revenues, and saw a fall in revenues of
36.1%. Revenue in our International division was impacted by
austerity measures in Europe and the reduced volume of large
tenders and was down 20.4% versus 2011.
Gross margin for the year was 36.7% (2011: 42.9%) and Adjusted
EBITDA was GBP5.1m (2011: GBP31.1m). The Group's Adjusted operating
result for the year was a loss of GBP5.5m (2011: profit
GBP23.4m).
Pro forma net loss was GBP3.8m (2011: net income of GBP16.4m).
This reduction largely reflects the trading in the year but also
includes an increased amortisation charge, excluding the
amortisation of acquired intangible assets, of GBP6.2m (2011:
GBP3.8m) resulting from the higher levels of capitalised research
and development costs incurred in recent years. In addition,
depreciation charges increased to GBP4.4m (2011: GBP3.9m).
Excluding exceptional items, share-based payments, amortisation
& depreciation and net of capitalised R&D costs, operating
costs of GBP52.5m (2011: GBP64.5m) were 18.5% lower than in 2011.
Second half operating costs of GBP19.8m were 37.5% lower than in
the second half of 2011 at GBP31.8m. The full benefit of our
operating cost reductions will be realised in 2013.
In 2012, the Group has recognised net exceptional costs of
GBP158.4m (2011: GBP4.7m). Our actions to reduce our operating cost
base contributed to a GBP16.5m exceptional reorganisation charge in
2012. An exceptional trade receivable impairment charge of GBP3.1m
has also been recognised in respect of a specific reseller.
As at 30 June 2012, the Group re-appraised the carrying values
of its assets in view of the current economic conditions and this
resulted in the goodwill being fully impaired. The vast majority of
this goodwill arose from the 2004 investment by Apax in our
business. Consequently, an exceptional non-cash impairment charge
of GBP140.5m was recognised. In December 2012, the Group sold its
minority investment in FlatFrog Laboratories A.B. for cash proceeds
of GBP1.7m and this has been recognised as exceptional income in
the year.
Dividend
In view of the trading performance, the Board has decided not to
propose a final dividend for 2012 and will therefore not be paying
a dividend in respect of 2012 (2011: final dividend 1.70 pence per
share giving a full year dividend of 2.50 pence per share).
Strategic vision for education
Promethean's vision for education is built around understanding
how all parts of the education system work and how our solutions
provide technology to improve learning productivity. Our vision
embraces whole-class learning (providing instruction to a class),
collaborative learning (project-based activities), personalised
learning (to evaluate and stretch each pupil) and the flexibility
to learn anywhere (broaden access to interactive collaborative
content and resources). It operates at classroom and school levels
and, through our enterprise platform, at school district and
country levels.
We analyse where the system needs to be more effective and our
Education Transformation Framework (ETF) takes these insights and
provides a step-by-step approach to implement the changes
necessary. The ETF shows how to build a locally relevant rapid
prototype that demonstrates the solutions have impact and then
moves on to replicating this success and building plans to scale
the solution and to sustain the impact.
In both January 2012 and 2013, Promethean was a platinum sponsor
at the Education World Forum (EWF). Held in London each year it is
the biggest meeting of Ministers of Education in the world outside
of the United Nations. In January 2013, 85 Government Ministers
from around the world attended EWF.
Promethean Planet(www.PrometheanPlanet.com)
Promethean Planet is the world's largest interactive whiteboard
community. In 2012, it grew its membership by 28.1% or 336,122, and
now has over 1.5 million members across more than 150 countries.
Promethean Planet supports the sale of other Promethean products by
providing interactive learning content, training and support to
users and as well as fostering direct interaction between
Promethean and teachers. It has over 68,000 teaching resources, up
35.4% during 2012 and recorded over 4.8 million unique visits
(2011: 4.2m) and almost 7.6 million downloads (2011: over 7m),
during the year.
Content initiatives
The availability of lesson resources aligned to curriculum
standards is a key factor in increasing the impact of interactive
technology on learning outcomes. In the second half of 2012,
interactive lessons for Houghton Mifflin Harcourt (HMH) Maths went
on sale in North America, both with the new Maths textbooks (HMH Go
Math! (c)2012 grades K-6 and HMH On Core Mathematics (c)2012 grades
6-11) and as a standalone product. Interactive lessons for HMH
Reading (for K-6 based on HMH's Journeys series) were also released
in the fourth quarter of 2012. The first royalty revenues from the
HMH partnership will be received in 2013.
Microsoft
Since the year end, Promethean has announced an alliance with
Microsoft to develop a new suite of solutions to provide a new
collaborative classroom-based learning environment. Working
together the two companies will develop a suite of Windows 8 and
Windows RT applications giving educators the ability to use
collaborative, interactive and real-time assessment technology to
personalise learning. This includes the development of Windows 8
and Windows RT apps for the ActivTable and to create ActivEngage
for Windows 8. In addition, they will also establish Content
Development Centres of Excellence that will focus on developing
ActivTable Windows 8 apps and digital content conversion for higher
education and K-12.
The effectiveness of interactive learning technology
The positive impact of interactive learning technology is
consistently being validated by successive research studies. In
2012, Promethean commissioned two further important studies. The
renowned Institute of Effective Education at The University of York
examined the impact of Promethean's ActivExpression devices on
pupil's achievement. This confirmed previous research carried out
by the Marzano Research Laboratories over the last four years, and
earlier work by BECTA across the UK, that four terms' learning can
be achieved in just three. A second piece of research published by
Marzano in December 2012 ratifies this impact.
Both the York study and the most recent Marzano research looked
at the impact of formative assessment in daily lessons. Formative
assessment techniques inform the learning process and the research
shows how the technology frees up teacher time and results in more
productive learning activities. Learners are also more engaged,
less disruptive and better focused overall on their learning. The
York study looked very closely at the teaching of grammar and the
Marzano research showed that impact was independent of subject, age
or ethnicity of student or age or experience of the teacher.
Outlook
We anticipate that the education technology marketplace will
continue to be difficult in 2013. The actions that we have taken
are designed to ensure Promethean can be profitable at the Adjusted
EBITDA level, and cash positive in the current market environment.
In addition, we are putting in place strategic steps particularly
on our software strategy, the impact of which should start to be
felt during 2014. For 2013, therefore, we will continue managing
our business prudently to protect our profitability and cash
flows.
Financial review
Revenues
Revenues for the year were GBP157.0m, a fall of GBP65.9m, which
is 29.6% down on 2011 (29.4% on a constant currency basis). By
product segment, interactive display systems (IDS) revenues were
GBP139.2m, down GBP57.0m compared to sales of GBP196.2m last year,
a reduction of 29.1%. Learner response system (LRS) revenues were
GBP17.8m, compared with GBP26.7m last year, a reduction of 33.3%.
LRS revenues as a percentage of total sales were 11.3% (2011:
12.0%).
The principal area of the Group's revenue decline was North
America, which represented 52.7% of Group revenues in 2012 (2011:
58.2%), where sales were GBP46.9m below the prior year, a reduction
of 36.1% (37.2% on a constant currency basis). Revenues in the
International region at GBP74.2m were down, versus 2011, by 20.4%
(17.9% on a constant currency basis).
Volumes and Average Selling Prices (ASP)
In terms of volume, Promethean sold 134,367 interactive display
systems, representing a decrease of 26.5% versus 2011 (2011:
182,791) and 581,103 learner response system handsets (2011:
905,529), 35.8% below last year.
The ASP of an interactive display system was 3.5% lower at
GBP1,036 on the prior year of GBP1,074, due to a greater proportion
of sales volumes from the International region (66.9% versus 61.1%
in 2011), where generally prices are lower and the sales mix is
weighted more towards entry level models, and board only rather
than full system sales.
The ASP of a learner response system handset increased to
GBP30.6 in 2012, from GBP29.4 in 2011, or up 3.9%. This increase in
ASPs reflects the availability of Promethean's premium LRS device,
the ActivExpression2, throughout 2012, having been released in the
fourth quarter of 2011.
Gross profit
Promethean's gross profit for 2012 was GBP57.6m (36.7% margin) a
reduction of GBP37.9m from GBP95.6m (42.9% margin) in 2011. Gross
margin was impacted by the reduction in sales volumes versus the
prior year, sales and regional mix and competitive pricing on
certain large tenders.
North America
Promethean's North America business segment consists of the
United States, Canada and the Caribbean with the United States
accounting for the large majority of sales in the segment in both
revenue and volume terms.
In 2012, North America revenue decreased to GBP82.8m from
GBP129.7m in 2011, or by 36.1%. Interactive display system revenues
at GBP68.6m were 35.9% lower (2011: GBP107.0m) and sales of learner
response systems decreased by 37.4% to GBP14.2m (2011:
GBP22.7m).
Sales volumes of interactive display systems decreased by 37.4%
from 71,069 in 2011 to 44,501. However, ASP in the current year
increased to GBP1,541 versus prior year of GBP1,505, principally
due to the sales in 2012 of the Group's premium interactive display
system the AB500 and also a higher proportion of system sales. The
market for learner response systems was difficult in 2012 with
Promethean experiencing a fall in handset sales volumes of 38.1%,
to 455,050 (2011: 735,673 units), as LRS sales continue to be
impacted by education budget challenges and the growth in tablet
device use in the classroom.
Gross profit for North America was GBP32.8m for the year (2011:
GBP57.7m) which equates to a gross margin of 39.6% (2011: 44.5%).
The gross margin reduction in North America was primarily due to
lower volumes and sales mix.
International
Promethean's International business segment consists of the UK
& Ireland, Continental Europe and the rest of the world.
In 2012, International revenue decreased by 20.4% to GBP74.2m
(2011: GBP93.2m). Interactive display system revenues were 20.9%
lower at GBP70.6m (2011: GBP89.2m) and sales of learner response
systems also fell, by 10.3% to GBP3.6m (2011: GBP4.0m).
Sales volumes of interactive display systems decreased 19.6%
from 111,722 in 2011 to 89,866. In 2012 demand has been lower than
previous years in territories such as Australasia and the Nordic
countries, as their markets mature, and in Spain, Portugal and
Italy due to austerity measures, and a large tender in Italy in
2011. Lower demand in these areas was only partially offset by
growth in Central Asia. The ASP fell by 1.6% to GBP786 (2011:
GBP799) primarily reflecting a higher proportion of sales to
emerging markets, where in general pricing is more competitive,
although the reduction in ASP has been offset to a degree by a
greater proportion of system sales. The market for LRS in the
International region remains immature but saw a 25.8% decrease in
volume from 169,856 handsets in 2011 to 126,053 handsets in
2012.
Gross profit for International reduced to GBP24.8m in 2012
(2011: GBP37.9m) reflecting lower sales volumes and a gross margin
of 33.5% (2011: 40.6%). International margins were lower due to
competitive pricing on tenders, the geographical mix of revenues
being more heavily weighted to emerging markets, a higher
proportion of system sales as well as the impact of costs
associated with the Mexico interactive whiteboard tender, which was
cancelled by the new Mexican government.
Operating expenses
Operating expenses, excluding exceptional items, share-based
payments, depreciation and amortisation, decreased from GBP64.5m in
2011 to GBP52.5m in 2012, a fall of GBP11.9m, or 18.5%, reflecting
the Group actively reducing its cost base in response to market
demand. As a percentage of revenue, operating expenses were 33.5%
in 2012, compared to 28.9% last year.
Operating costs, excluding exceptional items, share-based
payments, depreciation and amortisation, in H2 2012 at GBP19.8m
were 37.5% lower than in H2 2011 (H2 2011: GBP31.8m). Whilst the
full benefit of the cost savings will be realised in 2013, due to
the seasonality of the business operating costs will typically
remain more weighted to the first half of the year.
To achieve this level of reduction, in addition to savings in
third party costs, the number of employees in the Group has reduced
by 28.3% from 935 at 30 June 2012 to 670 as at 31 December 2012.
The Group's sales and marketing expenses fell by GBP9.0m to
GBP37.1m and represent 23.6% of revenue (2011: 20.7%).
Administrative expenses reduced by 17.1% (or GBP1.9m) to
GBP9.3m.
Total gross research and development expenditure (before amounts
capitalised) reduced from GBP16.1m in 2011 to GBP14.6m in 2012
(representing 9.3% of revenue). Throughout 2012, Promethean has
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 to
GBP6.2m versus GBP7.2m last year, a reduction of 13.8%.
Exceptional items
The net exceptional charge for the year was GBP158.4m (2011:
GBP4.7m).
As at 30 June 2012, the Group re-appraised the carrying values
of its assets in view of the current economic conditions.
Consequently the goodwill, the vast majority of which arose from
the 2004 investment by Apax in our business, was fully impaired and
has been written-off, resulting in an exceptional non-cash
impairment charge of GBP140.5m.
The Group incurred reorganisation costs of GBP16.5m in 2012
(2011: GBP2.9m). These costs comprised redundancy costs of GBP5.6m,
strategic product rationalisation costs of GBP5.5m (primarily
relating to the impairment of certain curtailed development
projects), a net movement in the provision for onerous leases in
respect of vacated properties of GBP1.4m, fixed asset impairments
of GBP3.6m and other costs of GBP0.4m, all arising from the
reorganisation of the Group to reduce its operating cost base in
line with current market demand. An exceptional trade receivable
impairment charge of GBP3.1m has also been recognised in respect of
a specific reseller.
On 17 December 2012, the Group sold its investment in FlatFrog
Laboratories A.B. for cash proceeds of GBP1.7m. Prior to disposal
this investment was carried at a fair value of GBPnil, having
recognised a GBP2.9m impairment charge in 2011, and therefore an
exceptional gain of GBP1.7m has been recognised in the year (2011:
exceptional loss GBP2.9m).
EBITDA and EBIT
Adjusted EBITDA excludes exceptional costs and non-exceptional
share-based payments charges. 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 of GBP5.1m in 2012 is 83.6% lower
than the previous year (2011: GBP31.1m) reflecting the reduction in
revenues, gross margin and operating costs in the year. Adjusted
EBITDA margin was 3.3% (2011: 14.0%).
Depreciation and amortisation (excluding amortisation of
acquired intangible assets) increased from GBP7.7m in 2011 to
GBP10.6m in 2012, an increase of GBP3.0m or 38.4%. This increase
reflects the sustained investment in infrastructure and product
development over a number of years. Upon completion of each
development project, the resulting asset is typically amortised
over a three-year period.
Adjusted EBIT fell to a loss of GBP5.5m in 2012 from a profit
GBP23.4m in 2011.
Interest and tax
The Group had net finance income of GBP0.5m in 2012 (2011:
GBP1.3m net finance costs). Throughout 2012 and since flotation in
March 2010 the Group has maintained a net cash position and as at
31 December 2012 the Group had no borrowings and a closing cash
position of GBP8.0m (2011: GBP21.8m).
Net finance income of GBP0.5m primarily comprises GBP0.9m
relating to foreign exchange gains (2011: GBP1.2m losses), bank
interest received of GBP0.1m (2011: GBP0.1m), partially offset by
commitment fees on the undrawn GBP40m revolving bank facility of
GBP0.2m (2011: GBP0.2m) and a GBP0.3m negative fair value
adjustment to financial assets (2011: positive adjustment of
GBP0.3m).
The Group's consolidated effective tax rate for 2012 was 3.4%
compared to 30.6% in 2011. However, excluding the non-deductable
goodwill impairment charge of GBP140.5m the effective tax rate in
2012 would have been 22.8%. The impact of non-taxable income in
respect of the sale of the Group's minority interest in FlatFrog
Laboratories A.B., prior year adjustments and non-deductable
exceptional expenses broadly offset each other.
Pro forma net income and basic earnings per share
On a pro forma basis, excluding the amortisation of acquired
intangible assets and exceptional items and assuming an effective
tax rate of 25% in 2012, versus 26.5% in 2011, pro forma net loss
for 2012 was GBP3.8m compared to net income of GBP16.4m in 2011.
Pro forma basic loss per share was 1.90p in 2012 (2011: earnings
per share of 8.23p) and was calculated as follows:
GBPm unless stated 2012 2011
------------------------------------------------------------ -------- ------
(Loss)/earnings before tax as reported (165.4) 16.1
Adjusted for:
Exceptional items (excluding goodwill impairment)
and ordinary share-based payments 19.1 5.2
Goodwill impairment (a non-cash exceptional cost) 140.5 -
Amortisation of acquired intangible assets 0.8 0.8
Fair value adjustment to deferred/contingent consideration - 0.3
Pro forma (loss)/earnings before tax (5.1) 22.4
Tax thereon (2012: 25.0%; 2011: 26.5%) 1.3 (6.0)
-------- ------
Pro forma net (loss)/income (3.8) 16.4
-------- ------
Number of ordinary shares (m)(1) 199.6 199.8
Pro forma basic (loss)/earnings per share (p) (1.90) 8.23
-------- ------
(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 free cash flow (defined as Adjusted EBITDA less
capital expenditure and changes in working capital excluding
exceptional provisions) was an outflow of GBP5.3m for 2012,
compared to an inflow of GBP18.0m for 2011. In H2 2012 the Group
had a free cash inflow of GBP3.0m (H2 2011: GBP17.3m), which
partially offset the free cash outflow in H1 2012 of GBP8.3m (H1
2011: inflow of GBP0.7m). Free cash flow for the year 2012 includes
a cash outflow of GBP1.3m invested during the year in Houghton
Mifflin Harcourt lesson content (2011: GBP0.5m).
The Group's net cash balance as at 31 December 2012 was GBP8.0m
(2011: GBP21.8m), a reduction of GBP13.8m due to trading in the
year, the payment of GBP1.1m deferred and contingent consideration
for the SynapticMash Inc. acquisition and incurring exceptional
reorganisation costs in reducing the Group's operating cost base,
partially offset by the receipt of GBP1.7m of cash proceeds from
the Group's disposal of its minority investment in FlatFrog
Laboratories A.B.
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 2011. 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 2012 2011
GBP000 GBP000
------------------------------------------------------- ----- ---------- ----------
Revenue 3 157,001 222,894
Cost of sales (99,363) (127,334)
------------------------------------------------------- ----- ---------- ----------
Gross profit 57,638 95,560
Operating expenses (223,545) (78,145)
----------
Analysis of results from operating activities:
Earnings before interest, tax, depreciation,
amortisation, exceptional
items and share based payments 5,102 31,109
Depreciation and amortisation (excluding amortisation
of acquired
intangible assets) (10,638) (7,687)
Amortisation of acquired intangible assets (801) (796)
Goodwill impairment - exceptional cost 4 (140,503) -
Other exceptional costs 4 (19,586) (5,963)
Exceptional income 4 1,710 1,282
Share-based payments 12 (1,191) (530)
------------------------------------------------------- ----- ---------- ----------
Results from operating activities (165,907) 17,415
----------
Finance income 5 991 411
Finance expense 5 (514) (1,731)
------------------------------------------------------- ----- ---------- ----------
Net finance income/(expense) 477 (1,320)
------------------------------------------------------- ----- ---------- ----------
(Loss)/profit before income tax (165,430) 16,095
Income tax credit/(expense) 6 5,605 (4,923)
------------------------------------------------------- ----- ---------- ----------
(Loss)/profit for the year(1) (159,825) 11,172
------------------------------------------------------- ----- ---------- ----------
(Loss)/earnings per share
Basic (loss)/earnings per share (pence) 10 (80.10) 5.59
Diluted (loss)/earnings per share (pence) 10 (80.10) 5.54
------------------------------------------------------- ----- ---------- ----------
Consolidated statement of comprehensive income
For the year ended 31 December 2012 2011
GBP000 GBP000
------------------------------------------------------ ---------- -------
(Loss)/profit for the year from the income statement (159,825) 11,172
Foreign currency translation differences for
foreign operations (536) 993
Net loss on net investments in foreign operations (939) (120)
Total comprehensive income for the year(1) (161,300) 12,045
------------------------------------------------------ ---------- -------
(1)All attributable to Equity shareholders and is entirely from
continuing operations
Consolidated statement of financial position
As at 31 December Note 2012 2011
GBP000 GBP000
-------------------------------------------------- ----- ---------- ---------
Assets
Property, plant and equipment 9,944 14,877
Intangible assets 8 17,955 160,839
Investments - -
Deferred tax assets 7,101 2,087
-------------------------------------------------- ----- ---------- ---------
Total non-current assets 35,000 177,803
-------------------------------------------------- ----- ---------- ---------
Inventories 15,400 18,237
Derivative financial instruments 74 356
Trade and other receivables 27,388 39,619
Current tax assets 1,043 1,649
Cash and cash equivalents 8,011 21,802
-------------------------------------------------- ----- ---------- ---------
Total current assets 51,916 81,663
-------------------------------------------------- ----- ---------- ---------
Total assets 86,916 259,466
-------------------------------------------------- ----- ---------- ---------
Liabilities
Trade and other payables (23,482) (32,841)
Derivative financial instruments (55) (83)
Provisions 11 (5,434) (3,954)
Current tax liabilities (1,005) (961)
-------------------------------------------------- ----- ---------- ---------
Total current liabilities (29,976) (37,839)
-------------------------------------------------- ----- ---------- ---------
Trade and other payables - (37)
Provisions 11 (999) (227)
Deferred tax liabilities - (1,686)
-------------------------------------------------- ----- ---------- ---------
Total non-current liabilities (999) (1,950)
-------------------------------------------------- ----- ---------- ---------
Total liabilities (30,975) (39,789)
-------------------------------------------------- ----- ---------- ---------
Net assets 55,941 219,677
-------------------------------------------------- ----- ---------- ---------
Equity
Share capital 20,000 20,000
Share premium 99,796 99,796
Capital reserve 93,990 93,990
Translation reserve (FCTR) 4,052 5,527
Retained earnings (161,897) 364
-------------------------------------------------- ----- ---------- ---------
Total equity (all attributable to equity holders
of the Company) 55,941 219,677
-------------------------------------------------- ----- ---------- ---------
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 2011 20,000 99,796 93,990 4,654 (6,177) 212,263
Total comprehensive income
for the year
Profit for the year - - - - 11,172 11,172
--------- --------- --------- ------------ ---------- ----------
Foreign currency translation
differences - - - 993 - 993
Net loss on net investment
in foreign operations - - - (120) - (120)
Total other comprehensive
income - - - 873 - 873
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Total comprehensive income
for the year - - - 873 11,172 12,045
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Purchase of own shares by
Employee Benefit Trust - - - - (889) (889)
Dividends to equity holders - - - - (4,289) (4,289)
Share-based payments (net
of tax) - - - - 547 547
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Total contributions by and
distributions to owners - - - - (4,631) (4,631)
Balance at 31 December 2011 20,000 99,796 93,990 5,527 364 219,677
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Share Share Capital Translation Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Balance at 1 January 2012 20,000 99,796 93,990 5,527 364 219,677
Total comprehensive income
for the year
Loss for the year - - - - (159,825) (159,825)
--------- --------- --------- ------------ ---------- ----------
Foreign currency translation
differences - - - (536) - (536)
Net loss on net investment
in foreign operations - - - (939) - (939)
Total other comprehensive
income - - - (1,475) - (1,475)
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Total comprehensive income
for the year - - - (1,475) (159,825) (161,300)
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Dividends to equity holders - - - - (3,368) (3,368)
Share-based payments (net
of tax) - - - - 932 932
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Total contributions by and
distributions to owners - - - - (2,436) (2,436)
Balance at 31 December 2012 20,000 99,796 93,990 4,052 (161,897) 55,941
------------------------------------ --------- --------- --------- ------------ ---------- ----------
Consolidated statement of cash flows
For the year ended 31 December Note 2012 2011
GBP000 GBP000
---------------------------------------------- ---- --------- --------
Cash flows from operating activities
(Loss)/profit for the year (159,825) 11,172
Adjustments for:
Depreciation 4,390 3,918
Amortisation of intangible assets 7,049 4,565
Impairment losses on property, plant
and equipment 3,573 548
Impairment losses on intangible assets 4,443 -
Impairment losses on goodwill 140,503 -
Impairment losses on investments - 2,939
Impairment losses on trade receivables 3,660 -
Gain on sale of investment (1,710) -
Gain on sale of property, plant and equipment (1) (7)
Net finance (income)/expense 5 (477) 1,320
Income tax (credit)/expense 6 (5,605) 4,923
Share-based payments 12 1,191 685
---------------------------------------------- ---- --------- --------
(2,809) 30,063
Change in inventories 1,792 1,617
Change in trade and other receivables 7,904 (5,754)
Change in trade and other payables (7,709) 4,048
Change in provisions 2,703 (604)
---------------------------------------------- ---- --------- --------
Cash generated from operations 1,881 29,370
Finance cost paid (548) (286)
Income tax paid (702) (2,838)
---------------------------------------------- ---- --------- --------
Net cash inflow from operating activities 631 26,246
---------------------------------------------- ---- --------- --------
Cash flows from investing activities
Finance income received 79 69
Proceeds from sale of investment 1,710 -
Proceeds from sale of property, plant
and equipment 8 14
Acquisition of property, plant and equipment (3,232) (4,277)
Development expenditure 8 (9,233) (9,383)
Acquisition of subsidiary - deferred
and contingent consideration (1,096) -
---------------------------------------------- ---- --------- --------
Net cash used in investing activities (11,764) (13,577)
---------------------------------------------- ---- --------- --------
Cash flows from financing activities
Purchase of own shares by Employee Benefit
Trust - (889)
Cash inflow/(outflow) from settlement
of derivatives 841 (204)
Dividends paid (3,368) (4,289)
Net cash used in financing activities (2,527) (5,382)
---------------------------------------------- ---- --------- --------
Net (decrease)/increase in cash and cash
equivalents (13,660) 7,287
Cash and cash equivalents at 1 January 21,802 14,506
Exchange rate effects (131) 9
---------------------------------------------- ---- --------- --------
Cash and cash equivalents at 31 December 8,011 21,802
---------------------------------------------- ---- --------- --------
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, 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 ActivClassroom
brings together its interactive display systems (ActivBoard), its
Learner Response Systems (ActiVote and ActivExpression), its
formative assessment software (ActivProgress) and its suite of
specialised teaching software (ActivInspire).
The Group financial statements consolidate those of the Company
and its subsidiaries for the year ended 31 December 2012.
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 26 February 2013.
2 Accounting policies
The accounting policies applied are fully disclosed in the
Promethean World Plc consolidated financial statements for the year
ended 31 December 2012.
There have been no changes in accounting policies during the
year ending 31 December 2012.
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.
Disclosures of segment performance are provided in the tables
below:
Reportable segmental revenue 2012 2011
GBP000 GBP000
----------------------------- ------- -------
North America 82,789 129,650
International 74,212 93,244
----------------------------- ------- -------
157,001 222,894
----------------------------- ------- -------
Reportable segmental profit (gross profit)
2012 2011
GBP000 GBP000
------------------------------------------- ------- -------
North America 32,802 57,669
International 24,836 37,891
------------------------------------------- ------- -------
57,638 95,560
------------------------------------------- ------- -------
3 Operating segments (continued)
Reconciliation to (loss)/profit before income 2012 2011
tax
GBP000 GBP000
---------------------------------------------- --------- --------
Reportable segmental profit (gross profit) 57,638 95,560
Sales and marketing expenses (37,076) (46,086)
Administrative expenses (9,253) (11,162)
Research and development (net) (6,207) (7,203)
Depreciation (4,390) (3,918)
Amortisation (6,248) (3,769)
Amortisation of acquired intangible assets (801) (796)
Exceptional costs(1) (160,089) (5,963)
Exceptional income(1) 1,710 1,282
Share based payments - non exceptional (1,191) (530)
Net finance income/(expense) 477 (1,320)
---------------------------------------------- --------- --------
(Loss)/profit before income tax (165,430) 16,095
---------------------------------------------- --------- --------
(1) Further details of the exceptional items are disclosed in
note 4.
Further analysis of the Group's revenues by type of product is
provided below:
Revenue by product 2012 2011
GBP000 GBP000
-------------------------------------------- ------- -------
Interactive display systems and accessories 139,220 196,228
Learner response systems 17,781 26,666
-------------------------------------------- ------- -------
157,001 222,894
-------------------------------------------- ------- -------
Interactive display systems and accessories
revenue by region 2012 2011
GBP000 GBP000
-------------------------------------------- ------- -------
North America 68,593 106,982
International 70,627 89,246
-------------------------------------------- ------- -------
139,220 196,228
-------------------------------------------- ------- -------
Learner response systems revenue by region 2012 2011
GBP000 GBP000
------------------------------------------- ------ ------
North America 14,196 22,668
International 3,585 3,998
------------------------------------------- ------ ------
17,781 26,666
------------------------------------------- ------ ------
4 Exceptional items
2012 2011
GBP000 GBP000
--------------------------------------------------- -------- -------
Goodwill impairment 140,503 -
--------------------------------------------------- -------- -------
Reorganisation costs 16,486 2,869
Impairment of trade receivables 3,100 -
Impairment of investment in Flatfrog Laboratories
A.B. - 2,939
IPO related share-based payment charge - 155
--------------------------------------------------- -------- -------
Other exceptional costs 19,586 5,963
Exceptional costs 160,089 5,963
--------------------------------------------------- -------- -------
Proceeds from sale of investment in FlatFrog 1,710 -
Laboratories A.B.
Release of provision for contingent consideration - 1,282
--------------------------------------------------- ------ ------
Exceptional income 1,710 1,282
--------------------------------------------------- ------ ------
Goodwill impairment
During the year, the Group re-appraised the carrying value of
its assets in view of the current economic conditions. As a
consequence, the goodwill (the vast majority of which arose from
the 2004 investment by Apax in the Group) was fully impaired and
has been written-off resulting in a non-cash impairment charge of
GBP140.5m (2011: GBPnil).
Reorganisation costs
The Group incurred reorganisation costs of GBP16.5m in 2012
(2011: GBP2.9m).
These costs comprise redundancy costs of GBP5.6m, strategic
product rationalisation costs of GBP5.5m (primarily relating to the
impairment of certain curtailed development projects), a movement
in the provision for onerous leases in respect of vacated
properties of GBP1.4m, fixed asset impairments of GBP3.6m and other
costs of GBP0.4m, all arising from the reorganisation of the Group
to reduce its operating cost base in line with current market
demand.
Impairment of trade receivables
An exceptional trade receivable impairment charge of GBP3.1m has
also been recognised in respect of a specific reseller (2011:
GBPnil).
Sale of minority investment in Flatfrog Laboratories A.B.
(FlatFrog)
On 17 December 2012, the Group sold its investment in FlatFrog
Laboratories A.B. for proceeds of GBP1.7m. Prior to disposal this
investment was carried at a fair value of GBPnil, having recognised
a GBP2.9m impairment charge in 2011, and therefore an exceptional
gain of GBP1.7m has been recognised in the year.
5 Finance income and expense
2012 2011
GBP000 GBP000
---------------------------------------------- ------- --------
Interest income on bank deposits 79 69
Net change in fair value of financial assets
at fair value through profit or loss - 342
Foreign exchange gains 912 -
---------------------------------------------- ------- --------
Finance income 991 411
---------------------------------------------- ------- --------
Interest and commitment fee expense on
bank and other loans (196) (198)
Debt issue costs amortised (64) (64)
Foreign exchange losses - (1,194)
Fair value adjustment to deferred/contingent
consideration - (275)
Net change in fair value of financial assets
at fair value through profit or loss (254) -
---------------------------------------------- ------- --------
Finance expense (514) (1,731)
---------------------------------------------- ------- --------
Net finance income/(expense) recognised
in profit or loss 477 (1,320)
---------------------------------------------- ------- --------
6 Income tax expense
2012 2011
GBP000 GBP000
--------------------------------------------------- -------- -------
Current tax expense
Current period 2,426 3,752
Adjustment for prior periods (1,066) 248
--------------------------------------------------- -------- -------
Current tax expense 1,360 4,000
--------------------------------------------------- -------- -------
Deferred tax expense
Origination and reversal of temporary differences (7,252) 1,646
Reduction in tax rates (173) (64)
Adjustments for prior periods 460 (659)
--------------------------------------------------- -------- -------
Deferred tax (credit)/expense (6,965) 923
--------------------------------------------------- -------- -------
Total tax (credit)/expense (5,605) 4,923
--------------------------------------------------- -------- -------
7 Dividends per ordinary share
In July 2012, in response to prevailing market conditions and
measures planned to realign the Group's cost base, the Directors
did not pay an interim dividend (2011: interim dividend paid 0.80p
per share totalling GBP1,597,000).
The Directors do not propose a final dividend (2011: 1.70p per
share) in respect of the year ended 31 December 2012. The total
dividend for the year was therefore GBPnil (2011:
GBP4,965,000).
8 Intangible assets
Goodwill
During the year, the Board re-appraised the carrying value of
its assets in view of the current economic conditions. As a
consequence, the goodwill (the vast majority of which arose from
the 2004 investment by Apax in the Group) was fully impaired and
written-off resulting in a non-cash exceptional impairment charge
of GBP140.5m (2011: GBPnil).
Other intangible assets
The movements in the net book value of development assets during
the year were as follows:
2012 2011
GBP000 GBP000
----------------------------------------- -------- --------
Net book value of development assets at
1 January 20,191 15,325
Additions from internal development 8,343 8,928
External additions 890 455
Exceptional impairment charge (4,443) -
Effect of movement in exchange rates (77) (14)
Amortisation for the year (6,986) (4,503)
----------------------------------------- -------- --------
Net book value of development assets at
31 December 17,918 20,191
----------------------------------------- -------- --------
As at 31 December 2012, the Group also had customer contracts
with a net book value of GBP37,000 (2011: GBP102,000).
9 Share capital and reserves
Throughout 2011 and 2012, Promethean World Plc had 200,000,000
10p ordinary shares in issue.
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
2012, the EBT held 943,033 shares in the Company (2011: 1,932,531
shares). During the year no shares were purchased by the EBT (2011:
1,600,000 shares purchased at a cost of GBP889,000).
10 Earnings per share
Basic earnings per share
The calculation of basic loss/earnings per share is based on the
loss/profit attributable to ordinary shareholders as disclosed
below and a weighted average number of ordinary shares outstanding,
calculated as follows:
(Loss)/profit attributable to ordinary 2012 2011
shareholders
GBP000 GBP000
----------------------------------------- ---------- -------
(Loss)/profit for the year attributable
to ordinary shareholders (159,825) 11,172
----------------------------------------- ---------- -------
Weighted average number of ordinary shares
In thousands of shares 2012 2011
-------------------------------------------- ---------- --------
Issued ordinary shares at 1 January 200,000 200,000
Less: Weighted average Promethean World
Plc shares held by the Employee Benefit
Trust (1,510) (709)
Effect of dilutive vested share options
not yet exercised 1,049 504
-------------------------------------------- ---------- --------
Weighted average number of ordinary shares
at the year end 199,539 199,795
-------------------------------------------- ---------- --------
Basic (loss)/earnings per share (pence) (80.10) 5.59
-------------------------------------------- ---------- --------
Diluted earnings per share
The calculation of diluted earnings per share at 31 December
2012 was based on (loss)/profit attributable to ordinary
shareholders as disclosed below, and a weighted average number of
ordinary shares outstanding calculated as follows:
2012 2011
GBP000 GBP000
--------------------------------------------- ---------- --------
(Loss)/profit attributable to ordinary
shareholders (basic and diluted) (159,825) 11,172
--------------------------------------------- ---------- --------
Weighted average number of shares (basic) 199,539 199,795
Effect of conversion of Promethean World
Plc share options - 1,881
--------------------------------------------- ---------- --------
Weighted average number of shares (diluted) 199,539 201,676
--------------------------------------------- ---------- --------
Diluted (loss)/earnings per share (pence) (80.10) 5.54
--------------------------------------------- ---------- --------
No adjustment has been made to the weighted average number of
shares for the purpose of 2012 diluted earnings per share
calculation as the effect would be anti-dilutive
11 Provisions
Contingent Onerous
Warranty consideration Restructuring leases Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- --------------- -------------- -------- --------
Balance at 31 December
2010 1,959 1,493 705 430 4,587
Created in the
year 1,709 - 1,755 500 3,964
Utilised in the
year (1,075) - (2,142) (113) (3,330)
Released in the
year - (1,282) - - (1,282)
Exchange - (2) - - (2)
Fair value adjustment - 244 - - 244
------------------------ --------- --------------- -------------- -------- --------
Balance at 31 December
2011 2,593 453 318 817 4,181
Created in the
year 1,983 - 6,702 1,393 10,078
Utilised in the
year (1,685) (453) (5,275) (413) (7,826)
Balance at 31 December
2012 2,891 - 1,745 1,797 6,433
Current 2,891 - 1,745 798 5,434
Non-current - - - 999 999
------------------------ --------- --------------- -------------- -------- --------
The warranty provision is calculated by estimating the possible
failure rates of the Group's hardware, with the exception of
projectors 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 2012.
Share options
On 26 March 2012, a total of 47,641 nil cost PSP option awards
were made to certain members of the SMT in respect of part of their
2011 bonuses which were deferred into these awards.
On 30 April 2012, 3,031,000 nil cost PSP share options were
granted, in addition 90,000 were granted as share appreciation
rights to be settled in cash on exercise. Also on 30 April 2012,
250,000 PRW CSOP share options with an exercise price of 51.625p
per share were granted.
On 31 October 2012, a further 1,570,000 nil cost PSP share
options were granted under the PSP, all of which are intended to be
equity settled. In addition, also on 31 October 2012 335,000 PRW
CSOP share options with an exercise price of 17.37p per share were
granted.
On 19 December 2012, a further 50,000 PRW CSOP share options
were issued with an exercise price of 15.25p.
12 Share-based payments (continued)
The movements in the number of share options in issue during
2012 were as follows:
Options Options
in issue Grants Exercised/ in issue Option
at 1 January in the lapsed at 31 December price per
2012 year in year 2012 share
(000s) (000s) (000s) (000s) (pence)
------------------- -------------- -------- ----------- ---------------- --------------------
2009 Chalkfree
CSOP 872 - (366) 506 5.25
2010 Chalkfree
CSOP 1,034 - (265) 769 5.25
IPO Plan 189 - (70) 119 -
PRW CSOP - 2010
grant 232 - (200) 32 125.00
PSP - 2011 grant 3,633 - (1,053) 2,580 -
PRW CSOP - 2011
grant 3,501 - (1,719) 1,782 59.75
PSP - 2012 grants - 4,649 (915) 3,734 -
PRW CSOP - 2012
grant(1) - 635 (50) 585 28.90
------------------- -------------- -------- ----------- ---------------- --------------------
Total options 9,461 5,284 (4,638) 10,107 n/a
------------------- -------------- -------- ----------- ---------------- --------------------
(1) Weighted average option price quoted based on the closing
number of options in issue.
The movements in the number of share options in issue during
2011 were as follows:
Options Options
in issue Grants Exercised/ in issue Option
at 1 January in the lapsed at 31 December price per
2011 year in year 2011 share
(000s) (000s) (000s) (000s) (pence)
----------------- -------------- -------- ----------- ---------------- --------------------
2009 Chalkfree
CSOP 927 - (55) 872 5.25
2010 Chalkfree
CSOP 1,326 - (292) 1,034 5.25
IPO Plan 502 - (313) 189 -
PRW CSOP - 2010
grant 232 - - 232 125.00
PSP - 3,633 - 3,633 -
PRW CSOP - 2011
grant - 3,501 - 3,501 59.75
----------------- -------------- -------- ----------- ---------------- --------------------
Total options 2,987 7,134 (660) 9,461 n/a
----------------- -------------- -------- ----------- ---------------- --------------------
Share-based payments charge
The share based payment charge for the period of GBP1,191,000
(2011: GBP685,000) comprises GBP1,177,000 (2011: GBP657,000) in
respect of share options, a credit of GBP6,000 (2011: a charge of
GBP1,000) in respect of share appreciation rights to overseas
employees where share option schemes are not practical and
GBP20,000 in respect of restricted share awards. Of the total
charge, GBPnil related to the IPO Plan (2011: GBP155,000 disclosed
within exceptional costs).
13 Accounts
The financial information set out above does not constitute the
Group's statutory accounts for the year ended 31 December 2012 or
31 December 2011 but is derived from those accounts. Statutory
accounts for Promethean World Plc for the year ended 31 December
2011 have been delivered to the Registrar of Companies, and those
for the year ended 31 December 2012 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, Lower Philips Road,
Blackburn, Lancashire, BB1 5TH.
Directors' responsibility statement
We confirm that to the best of our knowledge:
1. The annual announcement, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the company and the undertakings included in the consolidation
taken as a whole; and
2. The Operational Review and Financial Review includes a fair
review of the development and performance of the business and the
position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties they face.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGURGPUPWGBQ
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