TIDMPRW
RNS Number : 0071I
Promethean World Plc
20 March 2015
20 March 2015
Promethean World Plc
("Promethean" or "the Company")
2014 Annual Report and Accounts
Promethean World Plc (LSE: PRW) confirms that the following
documents have today been mailed to registered shareholders:
-- 2014 Annual Reports and Accounts ("2014 Annual Report"); and
-- Notice of the 2015 Annual General Meeting.
These documents are now available on the Company's website,
www.prometheanworld.com in the Investors section and will
shortly be available for inspection at the National Storage
Mechanism website: http://www.hemscott.com/nsm.do
The Company's Annual General Meeting will be held at 11.30 a.m.
on 23 April 2015 at Promethean House, Lower Philips Road, Whitebirk
Industrial Estate, Blackburn, Lancashire BB1 5TH.
The appendix to this announcement contains additional
information which has been extracted from the Annual Report 2014
for the purposes of compliance with Disclosure and Transparency
Rule 6.3.5 and should be read together with the Preliminary
Announcement. This announcement is not a substitute for reading the
full 2014 Annual Report.
Enquiries
Promethean World Plc
Ian Baxter, CFO + 44 (0) 1254 290749
Citigate Dewe Rogerson
Consultancy + 44 (0) 20 7638 9571
+ 44 (0) 7973 611
Anthony Carlisle 888
Appendix
Statement of Directors' responsibility
The Directors are responsible for preparing the Annual Report
and the Group and parent company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and parent
company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent company financial statements on
the same basis.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent company and of
their profit or loss for that period. In preparing each of the
Group and parent company financial statements, the Directors are
required to:
-- select suitable accounting policies and then
apply them consistently;
-- make judgements and estimates that are reasonable
and prudent;
-- state whether they have been prepared in
accordance with IFRSs as adopted by the EU;
and
-- prepare the financial statements on the going
concern basis unless it is inappropriate
to presume that the Group and the parent
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
company's transactions and disclose with reasonable accuracy at any
time the financial position of the parent company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the
Annual Financial Report
We confirm that, to the best of our knowledge:
-- the financial statements, 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
-- the Strategic Report and Directors' Report
includes a fair review of the development
and performance of the business and the position
of the issuer and the undertakings included
in the consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
Approved by the Board and signed on its behalf by:
Jim Marshall
Chief Executive Officer
BUSINESS RISKS
Promethean is subject to a number of risks and uncertainties,
not all of which are under the direct control of the Group. The
principal risks and uncertainties with the potential to affect
Promethean's future prospects, along with descriptions of the key
mitigating actions that are in place to manage them, are summarised
below.
Pace of change in the education technology market
Promethean's business performance is dependent upon the rate of
adoption of its core technology, presently interactive display
systems and student response systems, in the worldwide K-12
market.
Change in the education technology market continues at a rapid
pace as innovative new hardware and software products are
introduced in key markets by a range of existing and new
competitors.
The way in which students learn is also changing, with many
bringing their own mobile devices into classrooms and methods such
as 'flipped' classrooms contributing to this development (i.e.
self-study outside the classroom environment followed by deeper
application and understanding in the classroom).
Developing and bringing to market new products and resources is
complex, costly and time consuming with no certainty of a
sustainable revenue stream at the end of the process.
There is a risk that Promethean may fail to successfully
innovate or to identify and react quickly enough to disruptive
technological developments of new and existing technologies of
others.
Mitigating actions
Promethean employs a high proportion of former educators across
a wide range of functions. We believe this approach provides
exceptional insight into the needs of the education market.
Promethean monitors the technology needs of education markets
globally and invests a significant proportion of its revenue in
developing innovative new products and services it believes will
meet those needs.
In 2014, Promethean developed its interactive flat panel
(ActivPanel Touch) and ActivBoard Touch range and has made further
significant investment in the development of its software
solutions. This includes the launch and development of
ClassFlow(TM), which enables teachers to easily create interactive
lesson plans, enables improved student-teacher collaboration and
facilitates assessment of student achievement. ClassFlow(TM)
connects disparate classroom tools and technologies, such as
laptops, tablets and smartphones, irrespective of brand or
manufacturer.
To further differentiate itself, Promethean provides a
comprehensive professional services and consultancy offering to
help educators get the most out of their educational technology
investments. Promethean also provides the largest online community
for interactive whiteboard users and a wide range of free and
premium teaching resources via the www.PrometheanPlanet.com
website.
Competition and global economic conditions
Promethean operates in highly competitive markets and encounters
aggressive competition on price across the range of its products
and services.
Demand for education technology continues to be affected by
global economic conditions, which has seen austerity measures
impact a number of Promethean's major markets, particularly the US
and Europe. This has led to greater uncertainty as to the level and
timing of future funding for education technology.
Interactive display systems may become increasingly commoditised
and alternative methods of teacher and student interaction may
become more prevalent.
Some of the Group's competitors may have significantly greater
resources than Promethean, which may allow them to invest more
heavily in new and emerging technologies. Others, especially in the
software market, may be smaller businesses and they may be able to
respond to technological or market changes more rapidly and at
lower cost than Promethean is able to.
Some competitors may bring to market low-cost, lower
specification products as a means to enter the global marketplace
for interactive technologies, or introduce new technology that
competes for a share of existing education technology budgets.
Mitigating actions
Promethean leverages its well-established and respected brand in
global education markets and competes on the technology,
functionality, quality and reliability of its products, services
and online community and content offering. It also offers "peace of
mind" for customers through reliable warranty and after-sales
support.
Promethean continues to invest in software development, bringing
innovative new products such as ClassFlow(TM) to market during
2014.
Promethean's multi-user interactive displays and other products
are available in various specifications to suit the needs of
different global markets. Promethean undertakes a variety of
marketing offers and promotions to offer enhanced value to
customers. Whilst every effort is made to maintain margins,
tactical pricing decisions are made on a case-by-case basis.
Promethean continues to invest in new technologies, such as
interactive flat panels, new ranges of multi-user interactive
displays, education software and services and other core research
and development projects.
Promethean continues to evaluate strategic partnerships to widen
its range of products and services. The Board believes that these
partnerships will provide an opportunity to create a competitive
advantage for the Group.
Corporate strategy
Promethean is currently in a state of strategic transformation,
transitioning from being predominantly an education hardware
provider to being a provider of holistic education solutions, which
include hardware, software and professional development and
consultancy services.
Hardware remains the Group's primary source of earnings and the
strategic challenge is the successful growth of software and
professional services to generate recurring revenue streams.
Promethean may fail to select the correct strategies to
successfully achieve its objectives.
Adequate skill sets and resources may not be in place to
successfully execute the strategies required to achieve objectives
efficiently and effectively.
Promethean may fail to communicate its objectives and strategies
clearly to all relevant stakeholders.
Mitigating actions
Promethean engages external expertise alongside in-house skills
and experience to evaluate and select appropriate strategies to
meet its objectives.
Promethean's strategies are periodically reviewed and
constructively challenged by the Board and executive management. In
2014, this included a dedicated two-day strategic review and
formulation meeting of the Board, in addition to scheduled Board
meetings which monitor progress.
Promethean utilises a range of external data sources, including
existing technology users, to understand the requirements of its
key target markets and determine potential demand for its new and
existing products.
Promethean's strategies are communicated directly to existing
major shareholders and potential investors through meetings with
the Executive Directors and Regulatory News Service (RNS)
announcements, and, more generally, to other stakeholders through
the Annual Report and other periodic business updates.
Employees are informed of the Company's strategic initiatives
through regular global town hall meetings and conference calls,
which include question and answer sessions.
Reliance on key individuals and succession planning
Reliance on a small number of key individuals, particularly the
Chief Executive Officer and the Chief Technology Officer, and the
failure to successfully plan to replace them in the event that they
become unavailable for any reason, represents a significant risk to
the business.
This is particularly relevant to Promethean at the present time
while it undergoes a period of strategic transformational change
and as it develops new and potentially business-critical products
in specialist technical areas.
Mitigating actions
The Nomination and Remuneration Committees met during the year,
not only to evaluate the composition and compensation plans in
place for the Board, but also to review succession plans in place
for key roles in the business.
While the personal vision and leadership of key individuals
cannot always be easily replicated in others, Promethean operates
personal development initiatives for all employees. This includes a
one-to-one mentoring scheme that serves to pass on critical skills
and knowledge to others identified as potential successors to key
roles.
Policies and procedures are in place over new product
development to try to ensure that technical knowledge is shared and
recorded and intellectual property is protected. Products are
worked on by teams to ensure more than one person possesses
essential knowledge of products as they are developed.
Employment contracts contain appropriate notice periods and
clearly state that intellectual property created by any employee
during their employment is the property of Promethean. There is an
employee incentive scheme in place for the creation of intellectual
property and the registration of patents.
Business disruption and product availability
Disruption to Promethean's business affecting the availability
of products or services could occur internally or externally
through the supply chain or distribution network.
Promethean's manufacturing facility in Shenzhen, China, could be
affected by natural disasters, infrastructure failures and other
natural or man-made disruptive events.
Promethean relies on third party suppliers for raw materials,
components and certain finished products.
Promethean's business model is built on developing and
maintaining an effective network of third party distributors and
resellers in the markets in which the Group operates. This indirect
sales model means that Promethean's sales performance is highly
dependent on the efforts and capabilities of its distributors and
resellers in generating leads, managing them through to completion
and providing high levels of service in their installation of
products and after-sales support.
Competition for the services of good quality distributors and
resellers in a number of Promethean's markets is strong. Promethean
may not be able to find partners with the correct skill sets,
particularly as the Group expands the range and nature of the
solutions it sells into software and professional services.
The Group is reliant on its information technology systems for
management of key operating processes, effective communication and
call centre effectiveness.
Mitigating actions
A formal business continuity risk assessment of the Shenzhen
facility has been completed. Disaster recovery plans have been
established and are maintained. A policy of dual sourcing for
critical components is in place, where this is economically
practical.
Suppliers of key components undergo rigorous quality management
assessments, components are inspected for defects and failure rates
are closely monitored. All products undergo extensive testing and
certification and the Group has robust and proven procedures to
manage quality issues as and when they arise. Suppliers are
expected to maintain their own appropriate disaster recovery
plans.
Promethean maintains insurance cover against business
disruption, including cover for loss of profits and damage and
consequential loss to third party property; provisions are made
against the expected cost of future product warranty claims.
Sales channel management teams are in place to manage
relationships with business partners. The Group operates an
accreditation scheme for its directly contracted distribution
partners, which includes training in Promethean's products and
services, such as installation.
Promethean also operates a reseller accreditation scheme to try
to ensure that appropriate levels of product knowledge, technical
competence and service performance can be achieved by partners with
no direct contractual relationship with Promethean.
Promethean's Partner Portal is an intranet-style service that
provides business partners with access to a range of information in
areas such as product specifications and sales and marketing
techniques.
In the US, Promethean has established a skilled inside sales
team to supplement the existing external channel structure. The
team focuses on specialist software sales, particularly
ClassFlow(TM), and on professional development services. The team
also assists existing partners by referring sales leads to them,
but also makes direct sales in territories where no such partner
exists.
Recovery plans for Promethean's core IT systems are in place
and, in the event of loss of use of one of the Group's office
buildings, employees would be relocated or instructed to work from
home via remote access.
Liquidity, credit defaults and capital structure
Promethean may be unable to access sufficient funds to meet its
short-term working capital requirements and/or finance its planned
investing activities.
Promethean utilises credit from suppliers in managing its
working capital. Certain of these suppliers extending credit may
themselves use credit insurance to mitigate their risk. A change in
the credit rating of Promethean could therefore impact the
availability of credit from suppliers, resulting in increased
working capital levels.
Promethean is exposed to credit default risk through the credit
lines it extends to its distributors and resellers.
The general economic climate also increases the risk that
Promethean's distributors and resellers may experience financial
difficulties, leading to disruption of Promethean's business, lost
or deferred sales and/or increased bad debt costs.
Mitigating actions
The Group undertakes regular cash flow forecasting over short,
medium and long-term horizons and seeks to maintain appropriate
cash reserves.
Bank facilities are maintained so they are available when
required. The Group has a GBP25m asset-based lending facility with
Wells Fargo Bank. This facility matures on 30 September 2017.
Promethean sets limits on the amount of credit it extends based
on assessment of individual customers' financial stability and
trading history, as provided by credit reference agencies. All
trade receivable exposures are overseen by the Global Credit
Manager and, where suitable insurance cover is available, the Group
seeks to insure against credit risk.
Related party transactions
The Annual Report 2014 contains the following statements in note
30 to the consolidated financial statements regarding the details
of certain related party transactions.
Transactions with key management personnel
Loans to Directors
At 31 December 2014 and 31 December 2013, there were no loans
outstanding to Directors.
Key management personnel compensation
In addition to their salaries, the Group also provides non-cash
benefits to Directors and Executive Officers and contributes to a
post-employment defined contribution pension plan on their
behalf.
Key management personnel compensation comprised:
2014 2013
Group GBP000 GBP000
------------------------------ -------- --------
Short-term employee benefits 2,680 3,482
Post-employment benefits 126 146
Termination benefits 587 -
Share-based payments 136 621
------------------------------ -------- --------
3,529 4,249
------------------------------ -------- --------
During the year, the Group implemented a number of changes
within the senior leadership team. Key management personnel, now
includes, both executive and non-executive Board members and
members of the Executive Leadership Team. During the year seven new
members were appointed and five members left the business.
The key management compensation disclosed above includes Tony
Cann's fees for his services as a Non-Executive Director up to his
ceasing to be a Director on 8 May 2014. With effect from 8 May
2014, Tony Cann has been employed by Promethean Limited to advise
in relation to product development matters. He receives a salary of
GBP38,000 per annum for his work in this capacity and these
emoluments are not included in the above table.
As at 31 December 2014, there were 17 key management team
members (2013: 16).
Key management personnel and Director transactions
Certain Directors, or their related parties, hold positions in
other entities that result in them having control or significant
influence over the financial or operating policies of these
entities.
A number of these entities transacted with the Group in the
reporting period. The terms and conditions of the transactions with
Directors and their related parties were no more favourable than
those available, or which might reasonably be expected to be
available, on similar transactions to non-key management personnel
related entities on an arm's length basis.
The aggregate value of transactions and outstanding balances
relating to these related party transactions were as follows:
Transaction Transaction Balance Balance
value value outstanding outstanding
sale/(purchase) sale/(purchase) debtor/(creditor) debtor/(creditor)
------------------- ----------------- ----------------- ------------------- -------------------
Year ended Year ended Year ended Year ended
2014 2013 2014 2013
Group GBP000 GBP000 GBP000 GBP000
------------------- ----------------- ----------------- ------------------- -------------------
Whitebirk Finance
Limited (120) (120) (40) (70)
------------------- ----------------- ----------------- ------------------- -------------------
Other Group related-party transactions
In the ordinary course of business, goods are manufactured by
our Chinese subsidiary and supplied to the UK for sale to either
the Group's sales and distribution offices in the US, France and
Germany or directly to external customers. All transactions and
outstanding balances with these related parties are priced on an
arm's length basis and are to be settled in the ordinary course of
business. None of the balances are secured.
Company-related party transactions
The Company transacts and has outstanding balances with certain
of its subsidiaries. Amounts due from subsidiaries and amounts due
to subsidiaries are disclosed in the notes to the financial
statements. No interest is charged on amounts due from Group
entities. No dividends were received from subsidiaries in the year
(2013: GBPnil).
Forward-looking statements
This document contains forward-looking statements which are made
by the directors in good faith based on information available to
them at the time of approval of this document. In particular, all
statements that express forecasts, expectations and projections
with respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of interest or exchange rates, the availability of
financing, anticipated costs savings and synergies and the
execution of the Company's strategy, are forward-looking
statements. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors which could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements, including a number of factors outside the Company's
control. Any forward-looking statements speak only as of the date
they are made, and the Company gives no undertaking to update
forward-looking statements to reflect any changes in its
expectations with regard thereto or any changes to events,
conditions or circumstances on which any such statement is
based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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