TIDMPSL
RNS Number : 0266G
Photonstar LED Group PLC
24 May 2017
24 May 2017
PhotonStar LED Group Plc
Full year results
PhotonStar LED Group Plc (AIM: PSL, "PhotonStar" or "the
Group"), the British designer and manufacturer of smart LED
lighting solutions, announces its audited results for the year
ended 31 December 2016.
Financial Performance and operational highlights in 2016
-- Reported loss before tax reduced to GBP1.43m (2015: loss GBP3.03m);
-- Basic loss per share reduced to 0.6p (2015: basic loss per share 1.9p);
-- Net debt reduced to GBP0.61m (2015: Net debt of GBP0.84m);
-- Revenue fell 23% to GBP5.32 million (2015: GBP6.90m);
-- Gross profit fell 29% to GBP1.76m (2015: GBP2.49m);
-- Adjusted EBITDA* loss increased to GBP0.70m loss (2015: loss GBP0.24m);
* 'Adjusted EBITDA' is defined as EBITDA before share option
charge and exceptional items
-- Focus in 2016 of the successful delivery of the Halcyon(TM)
product range to customers for one off projects and paid for
trials;
-- The transition of Halcyon(TM) into a software solutions business continued;
-- Completed development work on hardware for Halcyon(TM)
lighting and environmental monitoring solutions during the fourth
quarter of 2016 which should reduce research and development
expenditure by approximately GBP0.15m p.a. from the first quarter
of 2017; and
-- Raised GBP1.00m (before expenses) of additional capital in
February 2016 to further expand the Halcyon(TM) software and
services offering.
Post year end
-- halcyon CloudBMS product commercially available from 1 April
2017. The new HalcyonPRO2(TM) adds regulation of heating and
cooling, shading and power management to the proven lighting
control and environmental sensor network already in use in the
first Halcyon(TM) product;
-- On 27 April 2017, the Group announced a letter of intent
regarding the proposed roll out of the halcyonPRO2(TM) and its
halcyon CloudBMS platform; and
-- Raised GBP0.46m (before expenses) of additional capital in
May 2017 to fund the proposed roll out of the halcyonPRO2(TM) and
its halcyon CloudBMS platform and to provide the Group with
additional working capital.
James McKenzie, CEO of PhotonStar, said:
"In 2016, steady progress was made in transitioning the Group
into becoming a retrofit connected lighting and building management
business. We have installed a number of trials in a variety of
sectors.
The traditional lighting business has been placed under
significant pressure with deteriorating economic conditions in the
Middle East, significant competitor price reductions and
uncertainty due to Brexit in the second half of 2016. This resulted
in a decline in revenues and increased pressure on profit margins.
Costs savings have been made however and the Group is now a leaner
business.
The Group experienced challenging trading conditions during the
second half of 2016, which continued during the first quarter of
2017 but following the Company's recent participation at the IBM
InterConnect 2017 Conference management have felt more confident
about the market potential for the halcyonPRO2(TM) and its halcyon
CloudBMS platform. In addition, I was pleased to announce on 27
April 2017 the receipt of a letter of intent from a leading manager
and developer of student accommodation in the UK about the proposed
roll out of this platform with the proposed installation of
approximately 50,000 of the Group's Halcyon(TM) devices.
I am very grateful for the continuing support that the Company's
existing shareholders have shown over the last 18 months and look
forward to providing further updates regarding the proposed roll
out of Halcyon as 2017 progresses."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information:
PhotonStar LED Group Plc (www.photonstarled.com) +44 (0)2381 230381
James McKenzie - Group Chief Executive
Northland Capital Partners +44 (0)20 3861 6625
Patrick Claridge/David Hignell/Margarita
Mitropoulou (Corporate Finance)
John Howes/Rob Rees (Corporate Broking)
About PhotonStar LED Group Plc
PhotonStar LED Group Plc is a leading British designer and
manufacturer of intelligent lighting and building control
solutions. The Group's proprietary technology halcyon(TM) is a
scalable, secure wireless IoT and cloud based platform for retrofit
into commercial buildings, for energy reduction, asset monitoring
& control, and real time environmental, behavioural and energy
insights.
PhotonStar is based in Romsey, Hampshire with a manufacturing
facility in Wales.
Overview
2016 was a year when the Group concentrated on the successful
delivery of the Halcyon(TM) product range to customers for both one
off projects and also for paid for trials. The express intention by
both PhotonStar and its paid for trial customers is that such
trials are expected to lead to material roll outs across numerous
sites in many locations. The installation and monitoring of trials
has been an on-going process that has generated significant
feedback to us which has allowed us to improve the offering. The
process has taken longer than we originally anticipated as a
consequence of us undertaking various upgrades to the offering and
also due to the customers wanting to trial a variety of different
applications, reflecting the flexibility of Halcyon and the wide
range of building management issues that can be addressed. We are
however delighted to have been able to announce since the end of
the financial year under review that we have received a Letter of
Intent regarding the proposed roll out of the halcyonPRO2 and its
halcyon CloudBMS platform. This was received from a leading manager
and developer of student accommodation in the UK following a 9
month trial period that commenced in July 2016.
In order to achieve the delivery of successful trials followed
by large scale roll outs across multiple sites, we have
re-organised the Group from one that has been more traditionally
set up to deliver standard lighting solutions through standard
lighting sales channels into one that delivers Halcyon(TM) directly
to customers with sub-contractors in place to carry out the work
and customer liaison and training being organised by PhotonStar. We
have achieved this by creating a small team of directly employed
key staff who work with a network of sub-contractors. This means
that we are able to be highly flexible in terms of the technicians
that are needed for a particular installation without incurring
substantial fixed costs and overheads that would come with these
highly trained people being directly employed. The initial paid for
trials that are now installed and are being monitored by ourselves
and the relevant customer cover a wide cross section of industries
and also a range of project sizes. We anticipate that in future
these trials will also act as reference sites for new customers so
that we are able to move more quickly from the project design phase
into full scale project delivery rather than having to install a
trial project as an interim step.
The Group's proprietary technology Halcyon(TM) is a scalable,
secure wireless IoT ("Internet of Things") platform for retrofit
into commercial buildings, for energy reduction, asset monitoring
& control, and near real time environmental, behavioral and
energy insights. The ability of the system to gather and report
near real time data has created significant interest from a wide
range of industry sectors which regard this ability as a key part
of their future needs requirements.
The Board is pleased with the on-going collaboration with IBM
and anticipates that this will lead to some further project work
within IBM premises and also as a result of the steady flow of
introductions by IBM to a variety of potential customers where IBM
have identified a customer requirement for cloudBMS(TM) . This
started at the beginning of the year with the test installation at
IBM's Hursley House offices, then developed into a demonstration of
the Halcyon(TM) intelligent wireless lighting system operating with
the IBM Watson IoT Cloud platform to IBM(R) clients and partners at
IBM's Global Watson IoT Headquarters in Munich, Germany. In
addition, PhotonStar attended the IBM Interconnect Conference in
February 2016, where the Group previewed its cloudBMS(TM) , the new
cloud based solution that delivers an IoT Building Management
System as a Service (BMaaS(TM) ). The new solution is built on the
second generation of its low cost retrofittable wireless monitoring
and control platform, halcyonPRO2(TM) . PhotonStar also
demonstrated the automated shading solution feature of
halcyonPRO2(TM) at the event. This solution taps into the IBM
Watson IoT Platform, taking environmental and occupancy data from
the Halcyon(TM) sensor network, geolocation information per room
and real time weather and forecast data from The Weather Company,
an IBM Business, to optimise window shade use to deliver maximum
energy savings thus reducing HVAC costs by intelligently using or
preventing solar heat gain and optimizing thermal, daylight and
visual comfort for building occupants. PhotonStar demonstrated with
IBM the retrofittable asset monitoring feature of halcyonPRO2(TM)
and cloudBMS(TM) , providing device health and key asset
performance indicator information and the concept of seamlessly
integrating to IBMs Maximo asset management package.
The Group has also been working hard to ensure that our more
traditional businesses are modified in order to reflect the ever
increasing competitiveness of the markets in which they operate in.
This has meant that during the year under review we have cut a
significant amount of overheads out of the business. Alongside the
huge effort in reducing our cost base we have also re-organised the
sales efforts of the businesses in order to ensure that we
successfully generate revenue and at the same time to ensure that
our gross profit margins recover from the poor levels that we have
endured in the period under review. We are starting to see the
impact of these efforts, with gross margins in all business
segments now increasing again from a low for the Group of
approximately 24% in January 2016 to 33.1% for first six months of
2016, and to 34.4% for the second half of 2016. There is no doubt
that the traditional lighting markets have continued to be highly
competitive with constant downward pressure on prices. In addition
the recent increased volatility of exchange rates meant that our
costs of imported goods became harder to forecast.
On 25 February 2016 it was announced that the Group had raised
gross proceeds of GBP1.00m (before expenses) by way of a placing of
38,000,000 ordinary shares of 1p each and a subscription of
2,000,000 ordinary shares of 1p each at a price of 2.5p per share.
The funds raised have been used to complete the Halcyon(TM)
development work and to provide the capital required for on-going
software and product expansion together with Halcyon(TM) channel
and brand development.
The Group's full year revenue for 2016 was GBP5.3m (2015:
GBP6.9m). This reduction in revenue, when compared with the
previous year, is due to the continued price pressure in the more
traditional area of the Group's business (light fixtures), the
on-going emphasis by the Group on transitioning itself away from
light fixtures and into intelligent lighting solutions and building
control systems and market uncertainty following the UK's "Brexit"
referendum which has had a negative impact on existing and
potential customers. As a result PhotonStar experienced challenging
trading conditions in the second half of 2016 and as such the
Group's results for the year ended 31 December 2016 were lower than
we anticipated at the half year.
These factors impacted Group revenues strongly during the fourth
quarter of 2016 and the first quarter of 2017. However revenues so
far generated in the second quarter of 2017 are improved and the
current pipeline of projects for which we anticipate receiving firm
orders suggests that the remainder of the second quarter and the
third quarter of 2017 will continue to show improvement. The Group
made an adjusted EBITDA (as defined Note 7 to these results) loss
in 2016 of GBP0.70m (2015: loss GBP0.24m) and a loss after tax for
the year of GBP1.17m (2015: loss GBP2.77m).
Included in the loss after tax is an investment by the Group
into its Halcyon(TM) system of approximately GBP0.58m (2015:
GBP0.70m), whilst revenue generated by the installation of
Halcyon(TM) , primarily as trial systems that are expected to
result in much larger projects, was approximately GBP0.5m.
Overheads for the year 2016 were GBP3.26m, which compares
favourably to GBP3.57m for 2015, and is a reflection of the cost
saving measures that the Group implemented during the year. At 31
December 2016 the Group held cash balances of GBP0.23m (2015:
GBP0.20m) and had borrowings of GBP0.83m (2015: GBP1.04m). Included
within borrowings the Group had drawn down GBP0.69m of invoice
financing debt out of its total maximum facility of GBP1.65m.
Customers are still evaluating paid for trials for Halcyon(TM)
and halcyon CloudBMS(TM) , which includes several new trials that
were being installed during Q4 2016. Overall Halcyon(TM) revenues
slowed slightly and were lower than management had forecast, as the
trials indicated that certain software features and upgrades were
needed to improve the performance of large systems. Additional
features have now been identified and have been added so that
further roll outs are now being considered.
We are pleased to report that we completed the development work
on hardware and IoT device firmware for lighting control during the
fourth quarter of 2016, which will reduce R&D expenditure by
approximately GBP0.15m p.a. from the first quarter of 2017. The
focus of the R&D effort by the Group is now on platform and
cloud software development for the Halcyon(TM) platform and halcyon
CloudBMS(TM) .
PhotonStar's key strategic focus for 2017 is the further
development of Halcyon(TM) as the Group progresses towards the roll
out stage, and the completion of its transition into becoming a
designer and manufacturer of intelligent lighting and building
control solutions.
Chief Executive Officer's Statement
Business review
PhotonStar Technology Ltd - Halcyon IoT and LED light engines
("PST")
Focused on retrofitting existing buildings with lighting,
environmental monitoring and cloud based building management
services
In 2016 the Halcyon IoT and LED light engines revenues were up
16.3% to GBP0.59m (2015: GBP0.50m). The Group was restructured
during the first quarter of 2016 to create a new Halcyon IoT team
to better deliver 'turnkey' IoT lighting and cloudBMS(TM) solutions
and services to customers. The team became operational in April
2016 and since then has made solid progress in delivering projects
and trials with customers which had a positive effect on revenues.
This included a second major trial with a company that is
responsible for a large amount of student accommodation. The
Halcyon(TM) IoT team is now focused on ensuring that the installed
trials are completed successfully in anticipation of a further roll
out across the customers' entire property estate.
During the period under review we also installed Halcyon(TM)
into a number of other buildings in a variety of different industry
sectors, including offices, hospitals, care homes, hotels and
student accommodation. These trials have shown the customer how
Halcyon provides significant financial and property usage benefits
with many of the trials providing the customer with a pay back on
investment period of less than 12 months. Many of the trials that
we have now installed are in buildings that form a part of
significant property portfolios owned or managed by the customer
which means that if the customer is convinced by the benefits then
the roll out across their estate will be material for the Group.
Due to the fact that Halcyon(TM) has been designed as a retrofit
system the payback on installation costs for the customer are
usually less than 12 months so management are confident that the
results of the trials will help convince the customer that a full
scale roll out is both desirable and affordable.
The new HalcyonPRO2(TM) is an extended version of the original
Halcyon(TM) system and adds the regulation of heating and cooling,
shading and power management to the proven lighting control and
environmental sensor network already in use in the first
Halcyon(TM) product. CloudBMS(TM) , halcyonPRO2(TM) and cloud based
analytics combine to deliver an extremely capable, scalable and
secure service based solution at a price point and low entry cost
that enables owners of small to medium sized businesses to reduce
energy and operating costs and realise new insights into their
operations.
It is expected that the combination of the retrofittable
hardware and sensor inputs and the developments in cloud analytics,
visualisation and the connectivity options to asset management
software will lower operating expenses for owners of multiple
facilities by reducing manual compliance tests, manual monitoring
and inspection of assets, and enable smart predictive and
preventative maintenance.
In March 2016 the Company announced the grant of the first of
its IoT patents on secure commissioning. The secure commissioning
patent is a critical element of the Halcyon(TM) and HalcyonPRO2(TM)
wireless network technology. The out-of-band secure commissioning
patent is targeted at IoT lighting, sensors, actuators and other
devices employed particularly in commercial applications where
security vulnerabilities at the commissioning stage must be
safeguarded. The commissioning approach provides multiple novel
options to securely join wireless devices of different types to a
network without the need to be in physical contact or in proximity
of the device, while not compromising the network security keys.
The protocol also benefits from its ability to commission devices
at any time, even following installation, without the need for
special commissioning time windows. This lends itself to commercial
installation practices where phased installation and commissioning
may take place.
The Board anticipates that PST's revenue growth will be driven
by a combination of hardware sales and services in lighting,
heating, cooling, ventilation and critical asset monitoring.
Management anticipates that as the systems are installed the
service revenue component will strengthen the Group's gross
margin.
PhotonStar LED Ltd - LED lighting fixtures business
LED lighting focused on the new build market
In 2016 LED Lighting Fixtures revenues were GBP3.08m which
represents a 24% decrease from 2015 revenues of GBP4.04m with
adjusted EBITDA loss of GBP0.11m (2015: Loss GBP0.06m). Adjusted
EBITDA is explained and calculated in Note 7 to these results. The
export specification business came under significant pressure with
revenues falling significantly due to economic conditions
deteriorating in the Middle East. In addition the unexpected
increase in demand from house builders meant that we experienced
stock shortages in house-builder and wholesale product lines so
that we were unable to meet the full demand that we experienced and
some of the fulfillment of this demand that we did satisfy was
through the use of airfreight product and parts which impacted
margins. We resolved these issues during the second quarter so that
revenues for that period improved. The resolution of these issues
and the reduced cost base moved the fixtures business back into
profitability on an Adjusted EBITDA basis during fourth quarter of
2016.
The lighting market continues to transition towards LED
lighting, with colour-tuneable and Circadian LED lighting becoming
a significant subsector. The market in Europe alone is estimated to
be worth up to EUR2.3bn per year by 2020 (Source: Lighting Europe
2013, 'Human Centric Lighting'). The company has installed a number
of such projects in 2016 including:
-- Derriford Hospital, Glenborne wing (Phase 2); and
-- The Royal Mint visitor centre
House-builder sales exceeded forecast in the first half of 2016,
but then fell back slightly in the second half of 2016 due to
Brexit related uncertainty in the housing market. The Group
benefits from an exclusive contract with a leading UK
house-builder, initially announced in September 2012. The Group
subsequently announced in June 2016 that this major house-builder
contract was been extended for another year.
Camtronics Vale Ltd - Contract Manufacturing
Contract electronics manufacturing business
Camtronics Vale Limited undertakes critical LED and electronic
assembly operations for the Group's manufacture of its lighting
fixtures. Camtronics Vale also contracts electronics manufacturing
for third party customers. Contract manufacturing revenues were
down 30% to GBP1.66m (2015:GBP2.36m) with an adjusted EBITDA (see
Note 7) loss of GBP0.03m (2015: profit GBP0.27m). This company
experienced a material fall in revenue during the final quarter of
2015 and the first quarter of 2016. The fall in revenue was due to
a number of factors including a key customer deciding to source its
product from overseas and a new customer placing a very large
assembly order but then entering receivership. We have reduced the
cost base of this company and increased our sales effort so that
the revenues are now growing back towards to the historic levels
that we have benefited from in previous periods. This growth in
revenues and reduction in costs meant that this company made a
positive contribution to the Group's profits in the second half of
2016.
Financial overview
The Group is making good progress in transitioning from its
traditional LED product markets into becoming a retrofit connected
lighting and building management business. Meanwhile, focus
continues on maximizing its traditional revenues and maintaining
its margins, and investing in the enhancement of its Halcyon(TM)
product range and its building management services.
The Group's 2016 revenues decreased by 22.8% to GBP5.32m (2015:
GBP6.90m) with a gross profit margin of 33% (2015: 36%).
Administrative expenses in 2016 decreased by a further GBP0.30m
to GBP3.26m (2015: GBP3.56m), due to downsizing and continuing
tight control on costs.
Adjusted EBITDA (adjusted for share based payments) loss was
GBP0.70m (2015: loss GBP0.24m).
The Group reported a pre-tax loss of GBP1.43m (2015: loss
GBP3.03m) and loss per share for the year was
0.6p (2015: loss per share 1.9p). At 31 December 2016, the
Group's unused aggregate tax losses are approximately GBP10m.
Group net borrowings debt at 31st December 2016 was GBP0.61m
(2015: GBP0.85m). Group capital expenditure was GBP0.91m (2015:
GBP0.81m), relating to the purchase of the latest equipment for
contract manufacturing, and to the continuing investment in product
development and the patent portfolio, in particular the development
of the Halcyon(TM) system.
Current Trading and Outlook
The Group entered 2017 as a much leaner business with a
significantly reduced cost base. The research and development work
that we have undertaken over the last three years for the creation
of Halcyon(TM) and halcyonPRO2(TM) is now largely complete with
current and future development work concentrating on improvements,
cloud service models, new solutions and markets for Halcyon(TM)
rather than the creation of the system itself.
Trading continues to be difficult in the traditional LED and
contract assembly businesses, with competitive price pressure
remaining. However, further revenue improvement in all business
units is being seen in the second quarter of 2017 which, together
with the cost savings already in place, means that adjusted EBITDA
profitability is expected on a monthly basis in Q2 2017. The Group
has targeted Halcyon(TM) sales and marketing efforts into the
retrofit market and we continue to see good growth in this market.
This combined with the fact that our development work for this
industry leading product is now complete means that the Board views
the future with increased optimism.
At 31 December 2016 the Group held cash balances of GBP0.23m
(2015: GBP0.20m) and had borrowings of GBP0.83m (2015: GBP1.04m).
Included within borrowings the Group had drawn down GBP0.69m of
invoice financing debt out of its total maximum facility of
GBP1.65m.
Post Year End
CloudBMS
The Group announced the commercial availability of the Halcyon
CloudBMS product from 1 April 2017. This new solution is built on
the second generation of its low cost retrofit-able wireless
monitoring and control platform, halcyonPRO2(TM). The new
HalcyonPRO2(TM) adds regulation of heating and cooling, shading and
power management to the proven lighting control and environmental
sensor network already in use in the first Halcyon(TM) product.
CloudBMS(TM) , halcyonPRO2(TM) and cloud based analytics combine to
deliver a capable, scalable and secure Building Management System
as a Service (BMaaS(TM)) solution at a price point that enables
owners of small to medium sized businesses to reduce energy and
operating costs and realise new insights into their operations. One
of the key features of CloudBMS(TM) is the sharing of device data
with Asset Management software packages such as IBM asset
management packages Tririga and Maximo.
Halcyon roll out letter of intent
On the 27 April 2017 the Group announced a letter of intent
(LoI) regarding the proposed roll out of the halcyonPRO2(TM) and
its halcyon CloudBMS platform. This was received from a leading
manager and developer of student accommodation in the UK (the
"Customer") following a 9 month trial period that commenced in July
2016. During the trial period the Company's Halcyon IoT platforms
were installed to evaluate the use of Halcyon(TM) in reducing the
operating costs of the accommodation buildings for the Customer.
The initial trial incorporated 139 flats on one site and
demonstrated significant maintenance savings to the Customer.
Pursuant to the LoI, it is proposed that approximately 50,000 of
the Company's Halcyon(TM) devices will be installed. The Customer
has multiple sites in 24 UK cities which will now be surveyed to
assess the individual requirements for each site. It is envisaged
that the installations will begin during the summer months when the
student accommodation is vacant. The benefits of the reduced
operational costs come from cloud based monitoring rather than the
traditional engineer site visit approach, with maximum benefit for
the Customer being derived from the connection of the accommodation
sites to the halcyon cloudBMS system.
Due to the practicalities of this roll out it is intended that
each site will have its own purchase order issued to the Company
and there will not be a single large formal contract which covers
all the installations. The Company will provide further
announcements regarding the installations as appropriate.
In addition, the Customer is currently carrying out an estate
wide survey to understand where networked controls and IoT systems
would be applicable in their existing buildings and how the
Company's Halcyon(TM) solutions can be incorporated.
Placing to support proposed roll out and additional working
capital
On the 3 May 2017 the Group announced a fundraising round of
GBP465,000 (before expenses) via the placing of 37,200,000 new
ordinary shares with existing investors and Directors of the
Company at a price of 1.25p per share. Up to and including the
closing price of 2.85p on 2 May 2017, the placing price represents
a 64.7% premium to the Company's average 30 day closing price. The
net proceeds of the Placing will be used to fund the proposed roll
out of the halcyonPRO2(TM) and its halcyon CloudBMS platform as per
the announcement of 28 April 2017. The net proceeds will also
provide the Company with additional working capital.
Sales for the first quarter of 2017 are broadly in line with
management expectations with the traditional businesses continuing
to see increased pressure on revenue and profit margins but with
our new business, the Halcyon CloudBMS, having been validated by
the recently received recent letter of intent we see a path to
increasing revenues and profit margins. We believe that the Group's
future growth will be driven by a combination of hardware sales and
services in lighting, heating, cooling, ventilation and critical
asset monitoring.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
------------------------------------------ -------------------------- ---------
Revenue 5,319 6,901
Cost of sales (3,555) (4,416)
------------------------------------------ -------------------------- ---------
Gross profit 1,764 2,485
Administrative expenses (excluding
exceptional item) (3,263) (3,567)
Exceptional item (administrative
expenses) - (1,983)
------------------------------------------ -------------------------- ---------
Total administrative expenses (3,263) (5,550)
Other income 116 74
------------------------------------------ -------------------------- ---------
Operating loss before exceptional
item (1,383) (1,008)
------------------------------------------ -------------------------- ---------
Operating loss after exceptional
item (1,383) (2,991)
Financial expense (50) (34)
Loss before income tax (1,433) (3,025)
Income tax credit 266 258
------------------------------------------ -------------------------- ---------
Loss and total comprehensive income
for the year attributable to the equity
shareholders of the parent (1,167) (2,767)
------------------------------------------ -------------------------- -----------
Loss per ordinary share (pence)
attributable to the equity shareholders
of the parent
Basic and diluted (0.6p) (1.9p)
------------------------------------------ -------------------------- ---------
Consolidated Statement of Financial Position
As at 31 December 2016
2016 2015
GBP'000 GBP'000
-------------------------------------- -------- --------
Non-current assets
Property, plant and equipment 394 214
Intangible assets 1,898 1,811
-------------------------------------- -------- --------
2,292 2,025
Current assets
Inventories 774 874
Trade and other receivables 1,039 1,637
Current tax assets 160 360
Cash and cash equivalents 225 197
-------------------------------------- -------- --------
2,198 3,068
-------------------------------------- -------- --------
Total assets 4,490 5,093
-------------------------------------- -------- --------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 1,879 1,477
Share premium 7,776 7,271
Share capital reduction reserve 10,081 10,081
Share option reserve 641 599
Reverse acquisition reserve (8,843) (8,843)
Accumulated losses (9,347) (8,180)
-------------------------------------- -------- --------
Total equity 2,187 2,405
-------------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables and deferred
income 1,413 1,595
Borrowings 831 1,042
Provisions 44 36
2,288 2,673
-------------------------------------- -------- --------
Non-current liabilities
Deferred tax liabilities 15 15
Total liabilities 2,303 2,688
-------------------------------------- -------- --------
Total equity and liabilities 4,490 5,093
-------------------------------------- -------- --------
Consolidated Statement of Cash Flows for the year ended 31
December 2016
2016 2015
GBP'000 GBP'000
------------------------------------------- -------- --------
Cash flows from operating activities
Loss before tax (1,433) (3,025)
Exceptional item - impairment - 1,983
Depreciation 94 133
Amortisation 546 584
Movement in share option reserve 42 3
Movement in provisions 8 5
Grant income (62) (74)
Receipt of grants 24 41
Profit on Sale of Plant, Property
& Equipment (53) -
Change in inventories 100 185
Change in trade & other receivables 598 (63)
Change in trade & other payables (144) (406)
------------------------------------------- -------- --------
Cash used in operations (280) (634)
Tax received 466 64
------------------------------------------- -------- --------
Net cash used in operating activities 186 (570)
------------------------------------------- -------- --------
Cash flows from investing activities
Proceed on disposal of Plant, Property
& Equipment 53
Purchase of property, plant and equipment (274) (51)
Purchase of intangible assets (633) (758)
------------------------------------------- -------- --------
Net cash used in investing activities (854) (809)
------------------------------------------- -------- --------
Cash flows from financing activities
Proceeds from the issue of ordinary
shares (net of issue costs) 907 122
New bank facilities - 872
Repayment of previous bank facilities - (872)
Change in borrowings (211) 317
------------------------------------------- -------- --------
Net cash generated from financing
activities 696 439
------------------------------------------- -------- --------
Net (decrease)/increase in cash and
cash equivalents 28 (940)
Cash and cash equivalents at the start
of the year 197 1,137
------------------------------------------- -------- --------
Cash and cash equivalents at the end
of the year 225 197
------------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
Share
capital Share Reverse
Ordinary share Share reduction option acquisition Retained
capital premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Balance at 1 January
2015 1,438 7,188 10,081 596 (8,843) (5,413) 5,047
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Issue of new shares
(net of issue costs) 39 83 - - - - 122
Share option charge - - - 3 - - 3
Loss and total
comprehensive
income for the year - - - - - (2,767) (2,767)
Balance at 31 December
2015 1,477 7,271 10,081 599 (8,843) (8,180) 2,405
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Issue of new shares
(net of issue costs) 402 505 - - - - 907
Change in share option
reserve - - - 42 - - 42
Loss and total
comprehensive
income for the year - - - - - (1,167) (1,167)
Balance at 31 December
2016 1,879 7,776 10,081 641 (8,843) (9,347) 2,187
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
1. GENERAL INFORMATION
PhotonStar LED Group ("the Group") comprises PhotonStar LED
Group PLC ("the Company") and its subsidiary undertakings. The
Company is a public limited liability company incorporated and
domiciled in the United Kingdom. The Company's registered number is
06133765 (England and Wales) and its registered office is at Unit 8
Westlink, Belbins Business Park, Cupernham Lane, Romsey SO51 7JF.
This announcement was approved by the Board of Directors for issue
on 23 May 2017.
2. FINANCIAL INFORMATION
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS"), as adopted in the European Union and as applied in
accordance with the provisions of the Companies Act 2006. On 23 May
2017 the consolidated financial statements and this final audited
results announcement were authorised for issue in accordance with a
resolution of the directors and will be delivered to the Registrar
of Companies following the Company's Annual General Meeting.
Statutory accounts for the year ended 31 December 2015 have been
filed with the Registrar of Companies. The auditor's reports on the
financial statements for the years ended 31 December 2016 and 31
December 2015 are unqualified and do not contain any statement
under Section 498 (2) or (3) of the Companies Act 2006. The
auditor's reports on the 31 December 2016 and 31 December 2015
financial statements contain an emphasis of matter statement with
respect to going concern given the dependence of the Group on
achieving its anticipated growth in sales and meeting its cash flow
forecasts.
The annual financial information presented in this final results
announcement for the year ended 31 December 2016 is based, and is
consistent with, that in the Group's audited financial statements
for the year ended 31 December 2016. This audited results
announcement does not constitute statutory accounts of the Group
within the meaning of Section 435 of the Companies Act 2006. Whilst
the information included in this audited results announcement has
been prepared in accordance with the recognition and measurement
criteria of IFRS, this announcement does not in itself contain
sufficient information to comply with IFRS.
3. GOING CONCERN
The directors have adopted the going concern basis in preparing
the financial statements for the year to 31 December 2016. In
reaching this conclusion, the directors have considered for both
the Company and the Group, current trading and the current and
projected funding position for the period of just over 12 months
from the date of approval of the financial statements through to 31
May 2018.
Current funding
The Group's cash balance as at 31 December 2016 was GBP225,000
and the drawdown of borrowing was GBP831,000 against bank
facilities at that date of GBP1,790,000. Since then the Group has
continued to execute its business plan by:
o investing in the continuing growth of its Lighting fixtures
business and the development of new product ranges;
o continued further investment in expanding its Halcyon range;
and
o continued transformation of the Group into a retrofit
connected lighting and building management business through its
Halcyon and CloudBMS platforms.
In order to progress these plans after the year end, in May 2017
new shares were issued in the Company for a consideration of
GBP465,000.
Projected funding
Subject to the continued growth in Halcyon(TM) sales, the cash
flow projections show that the Group can continue to operate for a
period of 12 months from the date the financial statements were
signed.
The achievement of these projections is subject to uncertainties
described below.
The projections include assumptions on the amount and timing of
revenue and gross margin that the Group expects to achieve during
the period of the projections. These assumptions are subject to
both market and other uncertainties, as discussed in the Overview
and Business Review. In particular, the forecasts include
assumptions about the sales of the Group's Halcyon product range.
This is a relatively new product range and therefore there is more
uncertainty inherent in forecasting the timing and quantum of sales
since there is not yet a mature market for this product range.
The Group has incurred a net loss of GBP1,167,000 in the year
(2015: GBP2,767,000) and has been loss making since incorporation.
The projections reflect the directors' expectation that the Group
will be monthly adjusted EBITDA (as calculated in Note 7) positive
in 2017. To the extent there is a shortfall in revenue and/or gross
margin, it is likely to be at least partially offset by a reduction
in working capital requirements. Nevertheless, the ability of the
Company and the Group to continue as going concerns is dependent on
the ability of the Group to achieve the growth in sales of its
products projected by the directors in their current forecasts
which in turn depends on the Group being able to exploit the market
for the new product range. Growth needs to be sufficient for the
Company and the Group to be able to operate within their cash
resource and borrowing facilities.
Conclusion
It is acknowledged that the achievement of these projections is
subject to market and other uncertainties as outlined above and
consequently there is a material uncertainty which may cast
significant doubt about the Group's and Company's ability to
continue as going concerns. Nevertheless, after taking account of
the Group's current funding position, its cash flow projections and
the risks and uncertainties associated with these, the directors
have a reasonable expectation that the Group and Company have
access to adequate resources to continue in operational existence
for the foreseeable future. For these reasons they continue to
prepare the financial statements on a going concern basis. These
financial statements do not include any adjustments that would
result from the going concern basis of preparation being
inappropriate.
4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in preparing the financial
information were the same as applied in preparing the Company's
statutory accounts for the year ended 31 December 2015 in
accordance with International Financial Reporting Standards as
adopted by the EU.
5. EARNINGS PER SHARE
Basic loss per share 2016 2015
Loss attributable to ordinary shareholders GBP(1,167,000) GBP(2,767,000)
Weighted average number of ordinary shares 187,958,220 144,042,465
Basic loss per share (0.6p) (1.9p)
-------------------------------------------- --------------- -----------------
Diluted earnings per share is calculated by dividing the profit
or loss attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding after adjusting these
amounts for the effects of dilutive potential ordinary shares.
As the results for the years ended 31 December 2016 and 31
December 2015 are a loss, any exercise of share options would have
an anti-dilutive effect on earnings per share. Consequently
earnings per share and diluted earnings per share are the same and
the calculation has not been included.
As at 31 December 2016, there were share options outstanding
over 23,547,995 shares (2015: 17,442,390 shares), which could
potentially have a dilutive impact in the future.
6. EXCEPIONAL ITEM
2016 2015
GBP'000 GBP'000
------------------------ ----------------------------------------------------- ---------
Impairment losses - 1,983
Total exceptional item - 1,983
------------------------- --------------------------------------------------- ---------
As a result of the change in strategic direction by the Company
towards transitioning into a Group that increasingly focuses on
being a retrofit connected lighting and building management
business, the Board reviewed, in conjunction with the annual review
of goodwill, the value of certain historic assets on the balance
sheet but which are related to non-strategic areas of the Group.
The result of this review is that we have concluded that there
should be a no impairment charge to the balance sheet (2015:
GBP1,983,000).
The impairment loss in 2015 consists of the following:
Group 2016 2015
GBP'000 GBP'000
------------------------------- --------- --------
Goodwill - 1,626
Capitalised development costs - 189
Inventories - 125
Property, Plant and Equipment - 43
Total impairment loss - 1,983
------------------------------- --------- --------
7. SEGMENTAL INFORMATION
The directors consider that for the year ended 31 December 2016
the Group has operated in three business segments, LED Lighting
Fixtures, LED Light Engines and Contract Manufacturing. The Group's
principal activities consisted of the design, development,
manufacture and sale of LED Lighting Fixtures and of LED Light
Engines and Contract Manufacturing, as follows:
Halcyon
Year ended 31 December 2016 LED Lighting & Light Contract Total
Fixtures Engines Manufacturing
Revenue; GBP'000 GBP'000 GBP'000 GBP'000
UK 2,819 585 1,659 5,063
Rest of World 256 - - 256
--------------------------------- ------------- ----------- -------------- ----------
Total Revenue 3,075 585 1,659 5,319
--------------------------------- ------------- ----------- -------------- ----------
Adjusted EBITDA for reportable
segments (111) (353) (27) (491)
Depreciation and Amortisation (214) (377) (49) (640)
Interest Expense (20) (1) (29) (50)
Taxation Credit 70 196 - 266
Total Assets 1,243 1,916 895 4,054
Total Liabilities 616 364 396 1,376
Additions to Non-current assets
in the year 62 587 258 907
Year Ended 31 December 2015 LED Halcyon
(restated*) Lighting & Light Contract Total
Fixtures Engines Manufacturing
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
UK 3,648 503 1,699 5,850
Rest of World 387 - 664 1,051
--------------------------------- ------------- ----------- -------------- --------
Total Revenue 4,035 503 2,363 6,901
--------------------------------- ------------- ----------- -------------- --------
Adjusted EBITDA for reportable
segments (55) (284) 273 (66)
Depreciation and Amortisation (292) (384) (41) (717)
Interest Expense (19) - (15) (34)
Taxation Credit 59 199 - 258
Total Assets 1,964 1,891 808 4,663
Total Liabilities 676 348 511 1,535
Additions to Non-current assets
in the year 124 667 18 809
'Adjusted EBITDA for reportable segments' above is defined as
EBITDA before share option charge and corporate expenses, and
'Adjusted EBITDA' below is defined as EBITDA before share option
charge and exceptional item. The relevant amounts are disclosed
below. Corporate expenses consist mainly of certain expenses of the
parent undertaking such as legal, professional and consultancy
costs related to the Group's listing on AIM and other central costs
not allocated to business segments. Adjusted EBITDA, rather than
the traditional EBITDA measure, is used as an alternative
performance measure because it is a fairer approximation of
operating cash flows.
* Prior year figures have been restated to reflect revised
managerial reporting responsibilities
A reconciliation of the adjusted EBITDA to the loss before tax
is as follows:
Total Total
2016 2015
GBP'000 GBP'000
----------------------------------------- --------- ---------
Adjusted EBITDA for reportable segments (491) (66)
Corporate expense (210) (170)
------------------------------------------- --------- ---------
Adjusted EBITDA (701) (236)
Depreciation and amortisation (640) (717)
Share option charge (42) (55)
Interest expense (50) (34)
Exceptional item - (1,983)
------------------------------------------- --------- ---------
Loss before tax (1,433) (3,025)
------------------------------------------- --------- ---------
8. INCOME TAX CREDIT
Group 2016 2015
GBP'000 GBP'000
------------------------------------------------- -------- --------
Current taxation; research and development tax
credits
UK corporation tax on loss for the year (161) (182)
Adjustment in respect of prior periods (105) (76)
------------------------------------------------- -------- --------
(266) (258)
------------------------------------------------- -------- --------
Deferred tax - -
------------------------------------------------- -------- --------
Income tax credit (266) (258)
------------------------------------------------- -------- --------
9. AVAILABILITY OF DOCUMENT
Copies of this announcement (and the Company's statutory
accounts for the year ended 31 December 2016 when available) may be
obtained from the Company Secretary, PhotonStar LED Group PLC, Unit
8 Westlink, Belbins Business Park, Cupernham Lane, Romsey SO51 7JF.
A copy of the annual report and accounts will be sent to
shareholders shortly.
This announcement can also be viewed on the Group's website:
www.photonstarled.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEDFMDFWSEEI
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