Promethean World Plc Annual Report and Accounts 2011

Promethean World Plc 

Annual Report and Accounts 2011 

Spark inspiration.

Promethean Vision 

Promethean unleashes human potential by revolutionising 

the way the world learns and collaborates, making all of 

us more engaged, empowered and successful. 

Over the following pages are just a few examples of how we 

are keeping this true both for our customers and throughout 

our business. 

Contents 

Review of the Year 

IFC Corporate statement 

01 Highlights of our year 

02 Raising learning achievement 

through technology 

04 Investing in innovation 

06 Growing community and 

content 

08 Advocating thought leadership 

in education 

10 Chairman’s Statement 

12 Chief Executive 

Officer’s Review 

18 Financial Review 

Directors’ Report 

22 Business Risks 

27 Corporate Responsibility 

30 Board of Directors 

32 Shareholder and Corporate 

Information 

33 Directors’ Report 

35 Corporate Governance 

40 Directors’ Remuneration Report 

49 Statement of Directors’ 

Responsibilities in Respect 

of the Annual Report and 

the Financial Statements 

Financial Statements 

50 Independent Auditor’s Report 

52 Consolidated Income Statement 

52 Consolidated Statement 

of Comprehensive Income 

53 Statements of Financial Position 


of Changes in Equity 

56 Company Statement of Changes 

in Equity 

57 Statements of Cash Flows 

58 Notes 

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Promethean World Plc Annual Report and Accounts 2011 01 

Highlights of our year 

Business highlights 

· Accelerating investments in key strategic initiatives 

· Increased government level education opportunities (e.g. Mexico Pilot project) 

· Strategic content partnerships entered into with Channel One and 

Houghton Mifflin Harcourt 

· Entry foothold gained into adjacent business and government training market 

· Maintaining technology leadership in new product and software development 

· AB 500 Series multi-touch, multi-pen whiteboard 

· Next generation ActivExpression assessment handset with full 

QWERTY keyboard 

· ActivProgress changing the way classroom data and student records 

are managed 

· New software launches including ActivEngage assessment software for 

mobile devices 

· ActivTable, interactive multi-touch, multi-user table for collaborative working, 

very well received when shown at BETT in January 2012 

· Promethean Planet membership growth of 42.8% to almost 1.2 million members 

Financial highlights 

2011 2010 Change 

Revenue 1 (£m) 222.9 235.3 -5.3% 

Adjusted EBITDA 2 (£m) 31.1 33.1 -6.0% 

Adjusted operating profit 2 (£m) 23.4 27.4 -14.4% 

Adjusted operating margin 10.5% 11.6% n/a 

Profit before income tax 1 (£m) 16.1 17.2 -6.2% 

Pro forma net income 2,3 (£m) 16.4 19.2 -14.2% 

Pro forma basic EPS 2,3,4 8.23p 9.63p -14.5% 

Basic EPS 1 5.59p 8.50p -34.2% 

Net cash as at 31 December (£m) 21.8 14.5 +50.3% 

Total dividend per share 2.50p 2.40p +4.2% 

. As disclosed in the Consolidated Income Statement on page . 

. Excluding exceptional items, share-based payments and amortisation of acquired intangible 

assets. A reconciliation of results from operating activities as reported to adjusted operating 

profit (EBIT) and to adjusted EBITDA is shown on page . 

. Stated on a pro forma basis for post-IPO debt structure (interest and tax). 

. For , the weighted average number of ordinary shares is as per the Basic EPS calculation. 

For prior years it is assumed that million ordinary shares less the weighted average number of 

Promethean World Plc shares held by the Group’s Employee Benefit Trust were in issue 

throughout the year. 

Review of the Year Directors’ Report Financial Statements 

Terms frequently used in this document: 

IWB 

LRS 

Interactive Whiteboard 

Learner Response System 

K–12 Primary and secondary 

school for students 

aged 5–18 

ASP 

IDS 

Average Selling Price 

Interactive Display Systems

02 

Promethean World Plc Annual Report and Accounts 2011 

Raising learning achievement 

through technology 

Promethean was founded to deploy technology to support 

teachers and raise achievement in learning and by doing so 

help address the educational challenges of the 21st century. 

To achieve this objective, an understanding of the ‘Themes 

That Matter’ in global education is essential. 

Based on leading research, these six core themes are essential 

aspects that together create a more effective education experience: 

Teacher Effectiveness 

recognising how the learning day and the job of the teacher 

is evolving and how new tools and new skills are emerging 

to enable them to be more productive. 

Curriculum Development 

how the face and content of learning materials are changing, 

especially in critical areas like literacy, science, technology 

and mathematics. 

Curriculum and Assessment Assets 

integrating curriculum and assessment to generate critical 

information about individual learner progress that enables 

feedback and personalised learning. 

Data-driven Decision Making 

using feedback data to improve individual, and system-wide, 

performance. 

Student Achievement 

how technology can create meaningful personalisation 

of the curriculum and collaboration in learning activities. 

Education Continuum 

how technology supports education success beyond 

schooling and into the workplace. 

We are seeking to ensure educators have 

the tools to provide the right content 

in front of the right student for the 

right reason at the right time, with the 

ability to measure its efficacy, provide 

feedback and report results in a concise, 

meaningful and usable manner.


Technology makes a difference to learning 

Promethean has an ongoing commitment to supporting 

independent research to find out how technologies are best 

employed to improve education and what the education 

returns can be. 

The research 

Since the Marzano Research Laboratory 

2010 report entitled “Evaluation Study of 

The Effects of Promethean ActivClassroom 

on Student Achievement”, in which it was 

concluded that the average sustainable 

improvement in student achievement 

from using our ActivClassroom was 

+16 percentile points, further research 

has been carried out. 

Researchers at the University of York 

studied the use of Promethean’s Learner 

Response System (ActivExpression) 

and Learning Clip mathematics 

programme on student achievement. 

The 221 pupils involved in random 

controlled trials used ActivExpressions 

in asynchronous or Self-Paced-Learning 

(SPL) mode. 

The result 

The statistical analysis showed a significant 

advantage of SPL with the Learning Clip 

interactive whiteboard curriculum 

compared with the Learning Clip 

programme alone in promoting Year 5 

pupils’ mathematics learning. If these 

findings are extrapolated over a year it 

would be equivalent to children attending 

school for an additional three months. 

Impact of ActivExpression 

and Self-Paced-learning 

One month’s achievement in maths 

Number 

of months 

12 

10 

8 

6 

4 

2 

0 

9 

Without 

ActivExpression 

and SPL 

12 

With 

ActivExpression 

and SPL 

Scan with your QR 

reader to browse more 

research findings 

9 

Review of the Year Directors’ Report Financial Statements

04 


Investing in innovation 

Throughout 2011, Promethean has continued to launch new products and invest 

in a number of strategic education content initiatives. We recognise that continued 

investment in our products and services is fundamental to improving both learning 

outcomes and the success of our business. 

Despite challenging market conditions for much of 2011, Promethean has 

continued to increase investment in new product development: 

Gross R&D expenditure 

£m 

18 

15 

12 

9 

6 

3 

0 

9.5 

2009 

14.3 

2010 

16.1 

2011 

Percentage of revenue to which gross 

R&D expenditure equates 

% 

8 

6 

4 

2 

0 

4.6 

2009 

6.1 

2010 

7.2 


The strength of our product portfolio 

is reflected in the number of industry 

awards won by the Group during 

the year including: 

BETT UK Awards 2011 

· ICT Company of the Year 

CODiE Awards 2011 

· Best Education Community Solution 

· Best Non-Traditional Education Solution 

Tech Awards 2011 

· Scholastic Administrator Best 

District Administration Magazine 

· Top 100 product 2011 (AB500) 

EdTech Digest 2011 Awards 

· 3 awards (for ActivExpression, 

Promethean Planet and Channel 

One News InterActiv)


Key product launches in 2011 

ActivBoard 500 series interactive whiteboard 

our multi-touch, multi-pen, multi-user interactive 

whiteboard launched in January 2011 and has been 

well received in the marketplace. 

ActivExpression 2 

our next generation ActivExpression device providing 

a full QWERTY keyboard and larger screen, as well 

as mathematical functions. 

ActivProgress 

our formative assessment software proposition for the 

education market. 

ActivEngage mobile 

expanded our range of Learner Response Systems with 

a client version of ActivEngage now available on Apple 

and Android devices. 

Channel One News InterActiv 

combining Promethean’s interactive whiteboard technology 

and student response devices with Channel One’s 

award-winning daily current events programming, produced 

in partnership with CBS News. (See case study on page 15). 

New products for launch in 2012 

ActivTable 

a dynamic collaborative learning environment designed to drive 

student engagement and creativity. The ActivTable supports 

productivity of learning, student assessment and inclusion. 

Features include 

· 46” Full HD LCD display – one of the largest screens 

on any interactive table 

· Promethean software platform facilitates class management 

and a suite of customisable teaching applications 

· Integrated Windows 7 PC provides ‘plug and play’ usability 


HMH and Promethean interactive maths lessons 

a new line of over a thousand interactive maths lessons, including 

integrated assessment, aligned to the Common Core Math 

Standards for US schools are currently being created and will be 

launched in 2012. (See case study on page 6 for further details).

06 


Growing community 

and content 

In 2011 Promethean Planet – the world’s largest online interactive 

whiteboard community – passed through the 1 million member 

milestone and is continuing to grow. 

Promethean Planet 

Promethean Planet is a unique, online community where educators converge to 

share, connect and collaborate – all in the spirit of creating inspiring, interactive 

learning environments. Planet provides its members on a free membership basis: 

Content and Resources 

· 50,000+ teaching resources 

· Publisher Created Resources (PCR) 

· Channel One, HMH, Inanimate Alice 

Professional Development 

· Self-paced online training 

· Helpful guides and FAQs 

· Tips and tricks 

· Member network of superusers and advocates, focused 

on community building and members’ engagement 

Support 

· Promethean product support 

· Technical support forums 

· Curriculum focused forums 

Community 

· Public and private groups 

· Blogs and forums 

· Opportunities to connect and 

collaborate with other members 

Additionally, in 2011, Promethean entered into partnerships with 

Channel One and Houghton Mifflin Harcourt to further expand 

the range of lesson resources available to Planet members. 

Houghton Mifflin Harcourt (HMH) 

During 2011, Promethean entered a strategic partnership with 

Houghton Mifflin Harcourt to create interactive mathematics 

resources aligned to US Common Core standards: 

HMH New Math Offering 

· New, supplemental mathematics 

programs developed to address 

US Common Core Math Standards 

· Go Math! (Grades K–6) 

· On Core Math (Grades 6–11) 

· Product consists of student textbooks, 

eEditions, teacher materials, practice 

books, videos and variety of ancillaries 

Promethean Interactive Lessons 

· Complete scope and sequence of 

skills needed to address Common 

Core Standards 

· Total of 1,032 lessons for grade K–11 

· Interactive, engaging lessons with 

integrated assessment and practice 

· Integrated math tools – HMH itools 

and Desmos graphing tool


Promethean Planet growth 

Total resources 

as at 31 December 


2010 

2009 

0 

16,428 

10,000 

24,637 

20,000 

30,000 

50,484 

40,000 

To fully utilise classroom technology, Promethean has long since 

recognised the need for teachers to have access to high quality 

and comprehensive interactive lesson content. Promethean Planet 

includes both free and publisher created teaching resources. 

50,000 

Total members 

as at 31 December 


2010 

2009 

0 

501,733 

0.2m 

0.4m 

836,634 

0.6m 

0.8m 

1,194,310 

1.0m 

1.2m 

One million 

members milestone 

Promethean Planet has 

scope to further expand 

with public and private 

community groups 

having access to lesson 

content aligned to 

curriculum standards. 


08 


Advocating thought 

leadership in education 

At Promethean we are seeking to select and shape technologies, 

services and solutions into just what a school, district, or country 

needs, then integrating them to deliver a fully immersive, 

effective learning environment that includes and serves the 

needs of all stakeholders. 

Integrating our software, technology, content and support together with a global 

education community gives us a very powerful proposition. We now have the 

systems, hardware and the media rich content which combine to make a great 

learning experience scalable. 

Over the last few years we have been investing in developing 

our strategic approach to consultancy. 

We are recognised as advocates of thought leadership in education by: 

· Engaging with education thought leaders through the internationally renowned 

“Education Fast Forward” which debates topics critical in educations such as: 

the productivity of learning, the relevance of learning and creativity, authentic learning. 

· Producing the Thinking Deeper Series of education whitepapers from leading 

educationalists including Janet Looney co-author of ‘Assessment Competency: 

Knowing What You Know and Learning Analytics’ and Riel Miller co-author 

of ‘Learning Productivity: It is Time for a Breakthrough’. 

· Taking leading roles in global education events including the Education World 

Forum (London), Global Education Leaders Program (Seattle) and the World 

Innovation Summit on Education (Qatar). 

Getting recognition in the right places 

Tony Mackay, Chair of GELP 

“ We invited Promethean to join the Global 

Educator Leadership Programme because of 

the quality of its thought leadership through 

Promethean’s deeper thinking white papers.” 

Tarek Shawki, Director of UNESCO Regional 

Bureau for Science and Technology in Arab States 

“ Promethean’s approach to strategic planning 

in education is extremely valuable and crucial 

to be able to help teachers make the best use 

of technology in their teaching.”


Over the last twelve months, Promethean has been 

invited to work with policy makers and governments 

to support them to transform countrywide education 

systems supported by the use of technologies through 

our own Education Transformation Framework. 

Education continuum 

Promethean recognises that education and learning is continuous 

and that technology can support learning beyond schools and 

colleges and into the workplace. Our innovative technologies 

are designed to support communication, collaboration, creativity 

and learning so it is natural for us to offer solutions for the whole 

education continuum. 


10 



Chairman’s Statement 

“ Our performance in 2011 has demonstrated 

the resilience of our business in markets which 

have remained challenging. We have 

responded positively. We have continued 

to invest in our business and consequently 

we are well positioned in our markets.” 

Graham Howe Chairman 

Our performance in has demonstrated the 

resilience of our business in markets which have 

remained challenging. We have responded 

positively. We have continued to invest in 

our business and consequently we are well 

positioned in our markets. 

Education remains universally recognised 

as an important catalyst for future economic 

growth and so is a global priority. The desire 

to improve learning standards is universal. 

Interactive learning technology can have a deep 

impact on learning standards, and there is an 

increasingly wide body of research, as well as 

the judgements of leading educationalists, which 

supports this view. At present, however, only 

a small fraction of the world’s classrooms have 

interactive learning technology. 

These are the reasons why we see the long-term 

fundamentals of our marketplace as being very 

positive and why the educational world is also 

a rapidly moving world. 

Our job is to ride out the current tough 

times in the US and Europe and to meet the 

heightened demand, once budgetary austerity 

gives way. We also continue to build our 

position in the rest of the world to capitalise 

on growing international demand. 

In doing so, we recognise that a lasting effect 

of the current climate of austerity will be an 

increased focus on cost efficiency and that 

the technology is not standing still. The fact 

is, though, that we are continuing to make 

investments and that our solutions and our 

approach can help governments as they look 

to secure increased value, efficiency and return 

on their investment in education. 

Last year, therefore we took a number 

of key initiatives. 

First, we cut our cost base to adjust it to the 

marketplace realities and to maintain a strong 

financial position. Secondly, we increased our 

investment in R&D, in order to maintain and 

build our technology lead. Thirdly, we launched 

a series of strategic initiatives both to strengthen 

our position within the US and to widen and 

deepen our relationships with governments and 

educational authorities across the world. We also 

increased our investment in Promethean Planet, 

now by far the world’s leading community 

of teachers interested in interactive learning 

technology and a key source of ideas, learning 

resources and a forum for discussion and 

exchange of experience. Lastly, we have launched 

into the adjacent business and government training 

markets, which we see as a medium-term parallel 

growth market, where we believe our technology 

can have important differentiation and appeal. 

It is not just the quality of the individual 

products and services that we are developing 

and rolling out, it is their combined effect that 

empowers teachers to transform their students’ 

learning outcomes. 

Bringing together our innovative hardware 

supported by our software, learner response 

systems and lesson resources obtained from 

Promethean Planet gives an educator the 

opportunity to stimulate and engage their 

students and gain real-time insight into their 

levels of understanding. 

Integrate this with our formative assessment 

solution, and teachers can also track students’ 

progress over-time, plan for individual needs and 

create records that can be accessed and assessed 

beyond the classroom. All these are key aspects 

of a st Century education system, and all have 

application across the world. 

With governments, we have increased our 

engagement at ministerial level in many different 

countries. We are helping to analyse with them 

their strategies for education in their countries 

and demonstrating the increasing evidence 

of the powerful impact of interactive 

educational technology. 

In the last months, we have launched 

Education Fast Forward bringing together 

educational thought leaders and specially invited 

guests, from different countries, on a single 

virtual stage, through debates on a range of 

topics on the future direction of education. 

A number of our employees have also addressed 

education conferences such as Education World 

Forum (EWF) and Global Education Leaders 

Programme (GELP).


I believe these initiatives have undoubtedly 

strengthened our position and will stand us 

in increasingly good stead. We know that 

will be another tough year in the US and 

Europe, but we are looking beyond the climate 

of austerity in these marketplaces and we are 

looking to the widening appeal of effective 

interactive learning technology in the rest 

of the world. I believe the long-term future of 

Promethean remains strong and that the actions 

taken last year have combined the right balance 

of financial discipline and longer-term initiatives 

to ensure we remain at the forefront of a 

global marketplace. 

2011 results 

For , we have contained the fall in our 

group revenues to .% to £. million – 

down .% in constant currency terms – despite 

a .% fall in sales (.% in constant currency) 

in North America, our largest marketplace. 

However, we saw modest growth in the second 

half, driven by our international markets beyond 

the US and Europe. We held our gross margin Dividends 

at .%, compared to .% in . Our 

operating cost base, excluding exceptional 

items, was down .%, despite a .% 

increase in R&D investment. Our adjusted 

EBITDA was down .% to £. million. 

Our focus on cash has strengthened our 

balance sheet with net cash up .% 

to £. million. 

Our people 

Without the skills, experience and commitment 

of our employees across the world we would 

not have made the progress we have in the 

last months. It is the collective drive 

and passion of our workforce that pushes 

Promethean forward and the Board and 

I would like to thank each one of them 

for their enthusiasm and commitment 

over the last months. 

Corporate Governance 

Details of the composition of the Board, the 

Board’s and individual Directors’ respective 

responsibilities and the operating arrangements in 

place to ensure efficient and effective governance 

are set out in the Corporate Governance report 

on pages to . The Board is satisfied that 

these arrangements, for which I have primary 

responsibility, comply with the requirements 

of the UK Corporate Governance Code. 

Reflecting our strong cash position and our 

confidence in our longer-term future, the Board 

is proposing a final dividend of . pence per 

ordinary share (: . pence per share), 

giving a total ordinary dividend for the year 

ended December of . pence 

per share, up .% on the total dividend 

of . pence per share for . 

Looking forward 

We have no doubt that the long-term demand 

drivers for our business remain strong. We have a 

talented management team in place, a committed 

and experienced force of employees, a stronger 

than ever product portfolio and a healthy 

balance sheet with no debt. will be another 

challenging year but we will continue to invest 

in our business and we are confident of our 

long-term future. 

Graham Howe 

Chairman 

27 February 2012 


12 



Chief Executive Officer’s Review 

“ Our results reflect strong execution 

against a backdrop of difficult US 

and European markets which have 

been a great deal tougher than for 

the majority of 2010.” 

Jean-Yves Charlier Chief Executive Officer 

Highlights 

· Resilient performance in difficult markets 

· Modest growth delivered in H2 

· Operating expenses down 6%, despite 

R&D investment up 13% 1 

· Accelerating investments in new product 

development and key strategic initiatives 

· Increase in total dividend by 4.2% 

to 2.50p per share 

. Excluding exceptional items, share-based payments 

and amortisation of acquired intangible assets. 

Our results reflect strong execution against a 

backdrop of difficult US and European markets 

which have been a great deal tougher than for 

the majority of . In the second half, we 

delivered modest growth, principally reflecting 

our fourth quarter performance in our 

international markets. 

We continue to believe that interactive learning 

technology, over time, will become ubiquitous 

and that it will be the integrated content rich 

solutions that will better stimulate teachers and 

learners and improve education outcomes. 

Against this background, whilst reducing our 

operating cost base, we have very actively driven 

Promethean forward in . We have increased 

our R&D investment, to create an increasingly 

integrated suite of products and software 

services and to maintain our technology lead, 

and we have pursued key strategic opportunities. 

Our confidence in our future and our balance 

sheet strength leads us to reaffirm a progressive 

dividend policy and to increase our 

recommended final dividend for . 

Operational review 

Overview 

During the second half of , the impact 

of government austerity programmes on 

educational budgets in the US and Europe 

became evident. This continued during , 

with the Group’s revenues down by .%, 

or down by .% on a constant currency basis, 

versus . Prompt action was taken to reduce 

the cost base of the business to reflect these 

market conditions, which has resulted in a 

decrease in operating costs of .% for the 

full year . 

At the same time, the Board took the long-term 

view that interactive learning technology will 

become prevalent in the classroom and that it 

will be the integrated, content rich solutions 

that will continue to lead the way in the future. 

The potential for long-term growth in the market 

remains very significant, with only % of the 

world’s classrooms today equipped with an 

interactive whiteboard and only around % 

with learner response systems. The Group has 

therefore continued to invest for the future and 

the reduction in operating costs was achieved 

despite increasing both gross R&D investment 

by .% and our ongoing investment in key 

strategic initiatives. 

As a result of this strategy, we have moved 

Promethean considerably from where we 

started at the beginning of . We have 

made significant strides in new product and 

software services development and are well 

advanced in building an holistic suite of hardware 

and software to help deliver better learning 

standards. Our products and services allow for 

real-time student assessment – providing the 

ability to instantly re-teach the points students 

have not grasped first time and to introduce 

tailored learning – and to the creation of 

student records beyond the classroom. 

During , the Group launched a number 

of significant new products and solutions. 

The AB Series multi-touch, multi-pen 

display system is setting the standard for 

interactive whiteboards. Our next generation 

ActivExpression handsets with full QWERTY 

keyboards were successfully launched. 

ActivProgress, our formative assessment 

software platform, has been successfully piloted


Group Revenue 

£222.9m -5.3% 

Adjusted EBITDA 1 

£31.1m -6.0% 

. Excluding exceptional costs and 

share-based payments. 

Business and government sector: 

Solutions for: 

· Increased productivity 

· Efficient training 

· Enhanced collaboration 

· Cost reduction 

Our strategy 

Summarised below is our strategy and how Promethean has moved 

forward in 2011: 

Develop 

Broaden our existing product portfolio to maintain 

our innovative edge 

· Increased our investment in R&D with several key product launches in 2011 

(see pages 4 and 5) 

· Entered strategic partnerships to expand content offering (see the Channel One 

case study on page 15) 

Grow 

Increase penetration of existing products in existing markets 

· Rolled-out 8,000 interactive display systems to some 4,000 schools in Italy 

· Increased revenues by 10.8% in our International sales region 

· Promethean Planet membership increased by 42.8% and now exceeds 

1.2 million members 

Expand 

Roll-out our product offering further in new markets 

· ActivProgress pilot in Mexico (see case study on page 17) 

· Maintaining global market share as IWB penetration worldwide exceeds 12% 

Diversify 

Reach beyond K–12 education market into adjacent sectors 

In 2011 Promethean established a Business & Government division to diversify into 

the adjacent corporate, government and military training markets. 

Whilst this is a medium/long term strategy, initial successes during the year include: 


· Over 250 customers 

· Entry level sales made to government departments

14 



Chief Executive Officer’s Review continued 

Our focus on improved learning, whether 

in the classroom or the workplace, drives the 

decisions made on the products and services 

we develop and the markets we address. 

Operational review continued 

Overview continued 

in Mexico, with over , tests completed in 

December for more than , students, 

and this pilot is now being further extended 

in . We have also launched our new 

ActivEngage Mobile software platform for 

tablet devices and smart phones. At BETT, the 

major international trade show held in London, 

in January we showed our multi-touch, 

multi-user ActivTable, for collaborative learning, 

which created substantial customer interest. 

The Group has also entered strategic partnerships 

with Channel One and Houghton Mifflin 

Harcourt, which will be rolled out in the US 

in . We have also gained an entry foothold 

in the business and government training markets. 

In addition, we have increased the level of 

engagement with governments at ministerial 

level in many different countries, helping to 

analyse the strategies for their countries and 

showing the increasing evidence of the favourable 

impact of interactive educational technology. 

The Group continues to build the strength of 

Promethean Planet, which during grew 

its membership by .% to around . million 

across more than countries and more than 

doubled its teaching resources to over ,. 

This has extended its lead as by far the largest 

on-line community for those interested in 

interactive learning technology. 

costs incurred in recent years. In addition, 

depreciation charges increased by .% 

to £.m (: £.m). 

The Group took action to reduce its cost base 

in the fourth quarter of and incurred 

further reorganisation costs during which 

has helped protect EBITDA profitability. These 

actions contributed to a net exceptional charge 

of £.m in , but have helped to ensure that 

operating expenses, excluding exceptional items 

and net of capitalised development costs, at 

£.m (: £.m) were .% lower 

than in , despite a .% increase in gross 

research and development expenditure to 

£.m (: £.m) and increased 

investment in our strategic initiatives. 

As part of our restructuring activities our UK 

& Ireland, Continental Europe and Rest of the 

World business segments were combined into 

one International business segment. 

North America, which continues to be our 

largest market accounting for .% of revenues, 

saw a fall in revenues of .% or .% on a 

constant currency basis. This was compensated 

for, to a degree, by the growth in our International 

division, which increased revenue by .% 

despite a fall in UK & Ireland revenues of .%; 

UK & Ireland now accounts for around % of 

Group revenues. Our International revenue 

included the successful rollout of some , 

ActivBoard+ interactive display systems to 

around , schools in Italy during . 

Financial overview 

Strategic approach to learning 

Group revenues for the year were £.m, 

.% below , or .% down on a constant 

currency basis. During the second half of , 

our performance relative to the prior year has 

improved with revenue, for the six months to 

December , of £.m (: £.m) 

showing growth of .% versus the prior period. 

Gross margin for the year was .% (: 

.%) and Adjusted EBITDA was £.m (: 

£.m), a fall of .%. Adjusted operating margin 

for the year fell from .% to .%. 

Pro forma net income was down .% to £.m 

(: £.m). This reduction includes an 

increased amortisation charge, excluding the 

amortisation of acquired intangible assets, of 

£.m (: £.m) resulting from the higher 

levels of capitalised research and development 

For a number of years, Promethean has been 

researching and evaluating how education is 

developing, what best practice looks like and 

how interactive learning solutions can generate 

improved learning outcomes. Our focus on 

improved learning, whether in the classroom 

or the workplace, drives the decisions made 

on the products and services we develop 

and the markets we address. 

Promethean recognises that it is the combined 

effect of cutting edge hardware, innovative 

software and stimulating lesson resources which 

creates engaging and effective lessons. It is also 

crucial to ensure that a learner’s progress can 

be reviewed, real-time, to ensure they receive 

the necessary support or intervention and that 

stakeholders including teachers, administrators 

and parents are aware of their progress. 

The strength of our product offering is 

reflected in the awards won during , 

which include: ‘ICT Company of the Year’ 

at the BETT UK Awards , ‘Scholastic 

Administrator Best’ in the Tech Awards , 

three Ed Tech Digest awards (for 

ActivExpression, Promethean Planet and 

Channel One News InterActiv) and the 

AB was named as a Top product by 

the District Administration magazine in the US. 

Our experience in the education sector is 

being recognised at national level in a range 

of countries across the world and Promethean 

has entered dialogue with districts and 

governments with a view to helping 

transform their education systems. 

Promethean Planet – 

over 1.2 million members 

Promethean Planet (www.PrometheanPlanet.com) 

is the world’s largest interactive whiteboard 

community and, in , it grew membership by 

.% and broke through the million member 

mark. It now has over . million members across 

more than countries and over , 

teaching resources, an increase of % during 

the year (: , resources). During , 

the site recorded almost . million unique 

visits (: . million) and over million 

downloads (: nearly million). Promethean 

Planet also received two CODiE awards for 

‘Best Education Community Solution’ and 

‘Best Non-Traditional Education Solution’. 

Promethean Planet supports ActivClassroom 

sales by providing interactive learning content, 

training and support to users and fosters direct 

interaction between Promethean and teachers. 

We are increasingly expanding public and 

private community groups globally to provide 

interactive content aligned to curriculum 

standards. We have also developed Planet 

to enable it to support new files and new 

formats, so Planet can extend its reach into 

non-Promethean classrooms.


15 

Case study 

Channel One News InterActiv 

Innovative content for Planet members 

Channel One News InterActiv is a new classroom content and professional development 

offering from Channel One News and Promethean that delivers relevant, real-world news 

and teaching tools on demand. 

Through our partnership with 

Channel One, we are now 

able to offer teachers in the 

US high quality, prep-free daily 

interactive digital content 

which integrates interactive 

whiteboard technology and 

Learner Response Systems 

into the Channel One’s daily 

news broadcast. 

The materials, which are aligned 

to core subjects and standards, 

are offered free for school-wide 

playback once daily or as a classroom 

video-on-demand subscription. 

The content has been found 

to increase student engagement 

as well as empower teachers by 

increasing their skill level with 

Promethean technology. 

To view the Channel One video 

please go to http://www. 

prometheanworld.com/en-us/ 

education/products/interactivecontent-and-resources/channel-interactiv 

or scan the QR code with 

your smart phone. 


16 



Chief Executive Officer’s Review continued 

Promethean recognises that it is the combined 

effect of cutting edge hardware, innovative 

software and stimulating lesson resources 

which creates engaging and effective lessons. 

Innovation and new products 

In , gross research and development 

expenditure increased by .% to £.m 

(: £.m), representing .% of 

revenue for the year (: .%). 

In we launched a number of new 

hardware and software products to enhance 

the Promethean ActivClassroom experience: 

ActivBoard 500 Pro-series 

Launched in January , the ActivBoard 

Pro-series has been well received in the market, 

with its leading-edge technology which allows 

the board to be operated simultaneously by 

both pen and ‘gesture’ touch. 

ActivExpression V2 

In the fourth quarter of , Promethean launched 

its next generation ActivExpression LRS device, 

which includes a full QWERTY keyboard, a larger 

screen with improved navigation, enhanced 

self-paced assessment capability and additional 

mathematical functionality. 

Promethean has now sold over million learner 

response handsets since the first such device was 

sold in . 

ActivEngage Mobile 

In , ActivEngage Mobile was launched 

to allow students to use their hand-held mobile 

devices to actively participate in a lesson – 

Apple iOS and Android systems can be 

used simultaneously for mixed deployment. 

ActivProgress 

ActivProgress is our formative assessment 

software proposition which transforms the 

way schools collect and manage classroom 

data, enabling teachers and administrators to 

better assess and track student performance. 

In August , Promethean and the education 

authority in Aguascalientes, Mexico, commenced 

an important pilot project to improve outcomes 

for students in primary and secondary education. 

As part of this project, over teachers have 

been trained to use ActivProgress and over 

, assessments have been delivered 

electronically with performance data available 

real-time. It is planned to extend the pilot 

project to more states in Mexico during . 

ActivTable 

Our ActivTable was displayed at BETT 

in January and is an important extension 

of our product portfolio, providing a ” 

multi-touch, multi-user HD LCD interactive 

table for collaborative working for up to six 

students simultaneously. The ActivTable along 

with our library of educational applications, 

covering a range of subjects and skills, provides 

a dynamic collaborative learning environment 

to stimulate student engagement and creativity. 

The product is expected to begin shipping in 

the middle of . 

Promethean ActivOffice 

Promethean ActivOffice was released in early 

and incorporates the majority of our 

key education tools from ActivInspire into 

Microsoft PowerPoint. 

Strategic partnerships 

Channel One 

In , Promethean entered a strategic 

partnership with Channel One News to create 

Channel One News InterActiv a high-quality 

daily interactive news service with digital 

content aligned to core subjects and standards. 

The digital content promotes real-time 

student interaction and provides teachers 

with preparation-free lessons and embedded 

professional development resources aligned 

to daily news. Results from the pilot project 

showed that one in three activities were 

student led and % of teachers improved their 

technology skills. Channel One News InterActiv 

is now available on a subscription basis (with 

no advertising) or free (with advertisements), 

with News InterActiv Jr available via subscription. 

The programmes can be viewed via any enabled 

interactive whiteboard, but the assessments will 

only be enabled with Promethean’s LRS devices. 

Houghton Mifflin Harcourt (HMH) 

In partnership with HMH, Promethean is 

producing over , interactive lessons to be 

utilised in conjunction with HMH’s Go Math! 

(Grades K–) and On Core Math (Grades 

–). Development work has commenced 

and the interactive lessons will be available in 

the second half of and will be sold with 

textbooks by HMH and on a stand alone basis 

by both HMH and Promethean. Delivery will 

be both on DVD and via Promethean Planet. 

Business and government 

A new division was created in the first half 

of to focus on our entry into the adjacent 

business and government segments. We have 

seen some early successes with interest from 

a number of Fortune companies and also 

entry level sales made into a number of key 

military, police and fire departments, as well as 

healthcare accounts. We have also collaborated 

with Cisco to explore how to integrate Cisco’s 

Telepresence, HD video conferencing systems 

with our interactive display systems for 

multi-room collaboration. As we have stated, 

entry into this market remains a medium/ 

long-term opportunity in which we are investing. 

Summary 

Looking ahead, we expect market conditions to 

remain tough in . However, I am confident 

that continuing our investment in our product 

portfolio and strategic initiatives will put 

Promethean in a position to deliver significant 

future growth over the long-term. 

Jean-Yves Charlier 

Chief Executive Officer 

27 February 2012


Case study 

Mexico Assessment Project 

In June 2011, Promethean signed a Memorandum of Collaboration (MoC) with the 

Mexican Secretaria of Public Education (SEP). 

Goal 

· Improve outcomes for students in primary and 

secondary education 

Issues to tackle 

· Student engagement 

· Real-time feedback to gauge learning and overall 

student progress 

· Ability to track teacher and school performance 

· Standards-aligned content and lessons 

· Paper-based testing 

Transformational approach to education to include 

· Interactive classroom technology to provide digital, 

interactive curriculum and content 

· Personalised Learning Platform 

· Robust data collection and reporting for teachers, 

students, parents and administrators 

· Standards-aligned content and lessons 

Pilot project undertaken 

· Commenced August 2011 and is ongoing 

· 100+ teachers trained 

· 8,000+ assessments delivered electronically 

and real-time performance data available 

· Weekly reporting implemented 


18 



Financial Review 

“ Conditions in our main markets have 

been challenging throughout 2011, 

but we have delivered revenues and 

Adjusted EBITDA of £222.9m and 

£31.1m respectively, whilst increasing 

investment in R&D and key strategic 

initiatives, and increasing our cash 

balance to £21.8m.” 

Neil Johnson Chief Financial Officer 

Highlights 

· Revenue for the year was £222.9m, down 

5.3%, or 2.1% on a constant currency basis 

· H2 revenues were £115.1m, up 1.9% on 

H2 2010 

· IDS volumes sold were 182,791, up 2.1% 

on prior year 

· Adjusted EBITDA was £31.1m 

· Adjusted EBITDA margin was 14.0% 

· Pro forma basic earnings per share 

was 8.23p 

· Net cash increased by 50.3% to £21.8m 

from £14.5m at previous year end 

Revenues 

Revenues for the year were £.m, a fall 

of £.m, which is .% down on or 

.% on a constant currency basis. By product 

segment, interactive display systems (IDS) 

revenues were £.m, down £.m compared 

to sales of £.m last year. Learner response 

system (LRS) revenues were £.m, compared 

with £.m last year, a reduction of .%. 

LRS revenues as a percentage of total sales 

were .% (: .%) as LRS revenues 

were disproportionately impacted by the 

challenging conditions in the US market. 

The principal area of the Group’s revenue decline 

was North America, which represented .% 

of Group revenues, where sales fell by £.m 

compared to the prior year, a reduction of .% 

or .% on a constant currency basis. This was 

partially offset by a £.m increase over 

in the International region, an increase of .% 

or .% on a constant currency basis. 

Volumes and Average Selling Prices 

(ASP) 

In terms of volume, Promethean sold , 

interactive display systems, representing an 

increase of .% versus (: ,) 

and , learner response system handsets 

(: ,,), .% below last year. 

The ASP of an interactive display system was 

.% lower at £, on the prior year of £,, 

due to a greater proportion of sales volumes from 

the International region .% (: .%), 

where generally prices are lower and the sales mix 

is weighted more towards entry level models and 

board only sales. 

The ASP for a learner response system handset 

reduced to £. in , from £. in , 

or .%. This decrease was due to a fall in sales 

in the US where market conditions have been 

challenging and where ASPs are typically higher 

than in International markets. Promethean’s next 

generation ActivExpression device was released 

in the fourth quarter of and so had a limited 

impact on ASPs in the year. 

Gross profit 

Promethean’s gross profit for was £.m 

(.% margin) a reduction of £.m from 

£.m (.% margin) in . Gross margin 

was impacted by regional and product sales mix 

and overall market conditions. 

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 , Promethean’s North America revenue 

decreased to £.m from £.m in , 

or by .%. Interactive display system revenues 

at £.m were .% lower (: £.m) 

and sales of learner response systems decreased 

by .% to £.m (: £.m). 

Sales volumes of interactive display systems 

decreased by .% from , in 

to ,. However, ASP in the current year 

increased to £, versus prior year of £,, 

principally due to the sales in of the 

Group’s premium interactive display system 

the AB and also a higher proportion of


Pro forma net income and basic earnings per share 

£m unless stated 2011 

Earnings Before Tax as reported 16.1 17.2 

Adjusted for: 

Pre IPO debt structure — 3.5 

Exceptional items and ordinary share-based payments 5.2 5.9 

Amortisation of acquired intangible assets 0.8 0.3 

Fair value adjustment to deferred/contingent consideration 0.3 0.1 

Pro forma EBT 22.4 27.0 

Tax thereon (: .%; : %) (6.0) (7.8) 

Pro forma net income 16.4 19.2 

Number of ordinary shares (m) 199.8 199.1 

Pro forma basic EPS (p) 8.23 9.63 

. Calculated for using the weighted average number of ordinary shares per the Basic earnings per share calculation; assumes million ordinary shares in issue 

during less an annualised weighted average number of shares held by the Group’s Employee Benefit Trust. 

Proportion of revenue by region 


2010 

2009 

Global IWB volumes sold 


2010 

2009 

North America 

58% 

North America 

64% 

North America 

63% 

182,791 

179,015 

160,715 

International 

42% 

International 

36% 

International 

37% 

system sales. The market for learner response 

systems was difficult in reflecting a fall 

in handset sales volumes of .%, to , 

(: ,, units), as LRS sales were 

disproportionately impacted by the education 

budget challenges in the US market in particular. 

Gross profit for North America was £.m 

for the year (: £.m) which equates 

to a gross margin of .% (: .%). 

International 

In , Promethean’s International revenue 

increased by .% to £.m (: £.m). 

Interactive display system revenues increased 

by .% to £.m (: £.m) and sales 

of learner response systems also increased, 

by .% to £.m (: £.m). 

Sales volumes of interactive display systems 

increased from , in to ,, an 

increase of .%. The ASP fell by .% to 

£ (: £) primarily reflecting growth 

in emerging markets where in general pricing is 

more competitive and sales mix is weighted more 

towards the interactive display and board 

only rather than system sales. The market for 

LRS in the International region is in the early 

adopter phase but saw a .% increase in 

volume from , handsets in to 

, handsets in . 

Gross profit for International increased to £.m 

in (: £.m) with gross margin of 

.% being maintained (: .%). 

Operating expenses 

Operating expenses, excluding exceptional 

items, share-based payments, depreciation and 

amortisation, decreased from £.m in 

to £.m in , a fall of £.m, or .%, 

reflecting the Group actively managing its 

cost base in response to challenging market 

conditions. As a percentage of revenue, 

operating expenses fell slightly, to .%, 

compared to .% last year. 

The reduction in operating expenses principally 

reflects reductions in the Group’s sales and 

marketing expenses, which fell by £.m to 

£.m and now represent .% of revenue 

(: .%). This reduction was achieved 

despite an investment in sales and marketing 

costs relating to the business and government 

training markets. Administrative expenses fell 

by .% (£.m) to £.m. 

Total gross research and development 

expenditure (before amounts capitalised) 

increased from £.m in to £.m 

in (representing .% of revenue). 

The increase reflects the continued investment 

by Promethean in the development of new 

products. Net of capitalised development 

expenditure, which Promethean is required 

to recognise under IAS Intangible Assets, 

research and development costs increased 

to £.m from £.m last year, an increase 

of .%. 


20 Promethean World Plc Annual Report and Accounts 2011 


Financial Review continued 

Exceptional items 

The net exceptional charge for the year was 

£.m (: £.m). 

The Group incurred £.m of reorganisation 

costs in (: £.m), completing the 

reorganisation that commenced in the fourth 

quarter of . This comprises £.m of 

restructuring costs and £.m relating to 

relocation of the Group’s Blackburn based 

operations to a new site in Lancashire, primarily 

comprising of a £.m onerous lease provision 

on its current headquarters, and related asset 

impairments of £.m. 

The Group’s investment in Flatfrog Laboratories 

AB (Flatfrog) has provided access to opticsbased 

multi-touch in-glass technology since 

the end of . However, the Group has 

re-assessed the fair value of its investment and 

has written it down to nil thereby incurring a 

non-cash exceptional charge of £.m in the 

period (: £nil). 

The Group has recognised an exceptional credit 

of £.m relating to contingent consideration 

of $m in respect of the acquisition of 

SynapticMash Inc in . Financial targets set 

at the transaction date have subsequently not 

been met and consequently this element of the 

contingent consideration is not payable. In , 

an exceptional charge totalling £.m was 

incurred in respect of this acquisition, and 

comprised of transaction fees and amounts 

payable to employees. 

Exceptional costs also included the last tranche 

of share-based payments charges in respect of 

the IPO Option plan £.m (: £.m). 

Exceptional costs in also included a 

£.m one-off IPO cash bonus. 

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 £.m in 

is £.m or .% lower than the previous 

year (: £.m) reflecting the continuation 

of the challenging market conditions that arose 

in late . Adjusted EBITDA margin remained 

broadly constant at .% versus .% in . 

Depreciation and amortisation (excluding 

amortisation of acquired intangible assets) 

increased from £.m in to £.m in , 

an increase of £.m or .%. This reflects 

the continued investment in infrastructure and 

increased investment in product development, 

which upon completion of each project are 

typically amortised over a three year period. 

Adjusted EBIT fell to £.m in from 

£.m in with the margin decreasing 

from .% in to .% in , largely 

as a result of the increased amortisation and 

depreciation charges. 

A further absolute increase in depreciation and 

amortisation is anticipated for . 

Pro forma net income and basic 

earnings per share 

On a pro forma basis, excluding pre IPO 

debt structure costs and exceptional items and 

assuming an effective tax rate of .% in , 

versus % in , pro forma net income 

was £.m compared to £.m in , 

representing a decrease of .%. Pro forma 

basic earnings per share was .p in 

(: .p) and was calculated as set 

out on page . 

Cash flow 

Interest and tax 

The Group’s net finance costs were £.m 

(: £.m). The £.m reduction versus 

reflects the repayment or conversion to 

equity of all shareholder and debt instruments 

in place at the time of the Group’s IPO in 

March . Since flotation in March 

the Group has been cash positive and as 

at December the Group had no 

borrowings and a closing cash position Summary 

of £.m (: £.m). 

Net finance costs of £.m primarily comprise 

£.m relating to foreign exchange losses 

(: £.m), commitment fees on the 

undrawn £m revolving bank facility of £.m 

(: £.m) and fair value adjustments to 

deferred and contingent consideration of £.m 

(: £.m), partially offset by bank interest 

received of £.m (: £.m) and a £.m 

positive fair value adjustment to financial assets 

(: £nil). 

The Group’s consolidated effective tax rate for 

was .% compared to .% in . 

The difference between the Company’s domestic 

tax rate for , of .%, and the effective tax 

rate of .% is primarily due to non-deductible 

expenses in respect of the £.m write down 

of the Group’s investment in Flatfrog and 

non-taxable income of £.m in respect of the 

SynapticMash acquisition. The effective 

tax rate reflected the unwinding of pre-IPO 

shareholder and debt structures as well as 

the recognition of a deferred tax asset on 

inter-company stock profits. 

The Group generated free cash flow (defined as 

Adjusted EBITDA less capital expenditure and 

changes in working capital excluding exceptional 

provisions) of £.m for , compared to 

£.m for representing a cash conversion 

of .% and .% respectively. 

The Group increased its net cash balance during 

by £.m and as at December had 

a cash and cash equivalents balance of £.m 

(: £.m) and no bank debt. 

Conditions in our main markets have been 

challenging throughout , but we have 

delivered revenues and Adjusted EBITDA 

of £.m and £.m respectively, whilst 

increasing investment in R&D and key 

strategic initiatives, and increasing our 

cash balance to £.m (: £.m). 

Neil Johnson 

Chief Financial Officer 

27 February 2012


Key Financial Performance Indicators 

We operate a balanced approach to measuring our performance. This ensures the Group 

targets its resources around its customers, community, employees, operations and finance. 

Revenue 1 

£m 

250 

200 

150 

100 

50 

0 

205.1 

235.3 

Total dividend per share 

pence 

2.5 

2.0 

1.5 

1.0 

0.5 

0 

222.9 

Adjusted EBITDA 

£m 

35 

30 

25 

20 

15 

10 

5 

33.9 

33.1 

Pro forma basic EPS 2,3,4 

pence 

31.1 

Cash/(net bank debt) 

0 

-5 

2009 2010 2011 

2009 2010 2011 

2009 2010 2011 

N/A 

2009 

2.40 

2010 

2.50 


12 

10 

8 

6 

4 

2 

0 

10.47 

2009 

9.63 

8.23 

£m 

25 

20 

15 

10 

5 

0 

(1.5) 

14.5 

Pro forma net income 2,3 

. As disclosed in the Consolidated Income Statement on page . 

. Excluding exceptional items, share-based payments, amortisation of acquired intangible assets and acquisition related fair value adjustments. A reconciliation 

of results from Earnings Before Tax as reported to Pro forma net income and to Pro forma basic earnings per share (EPS) is shown on page . 

. Stated on a pro forma basis for post-IPO debt structure (interest and tax). 

. For , the weighted average number of ordinary shares is as per the Basic EPS calculation. For prior years it is assumed that million ordinary shares less 

the weighted average number of Promethean World Plc shares held by the Group’s Employee Benefit Trust were in issue throughout the year. 

2010 


£m 

25 

20 

15 

10 

5 

0 

20.9 

2009 

19.2 

2010 

21.8 

16.4 



22 



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 that the Board believes 

have the potential to affect Promethean are summarised below, along with 

descriptions of the key mitigating actions that are in place. 

Risk and description 

Principal risks and uncertainties 

Strategic and Market Risks 

Global economic conditions 

Promethean’s key market remains the K– education sector, which is 

funded predominantly by local, state, regional or national public bodies 

whose own resourcing is affected by general macroeconomic factors 

through their impact on economic stability, tax revenues and accessibility 

of credit. 

Economic slowdown and austerity measures in Promethean’s major 

markets, particularly the US, have led to greater uncertainty as to 

the level and timing of future funding for education technology. 

Technology and innovation 

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. Delays in launching a new 

product could lead to Promethean losing “first mover” advantage 

or missing the seasonal sales cycle for a particular year. 

Display and interactive technologies in a range of applications continue 

to develop rapidly and there is a risk that Promethean may fail to identify 

and react quickly enough to disruptive technological developments 

or disruptive applications of existing technologies. 

Competition 

Promethean operates in highly competitive markets and encounters 

aggressive price competition across the range of its products and services. 

Some of the Group’s current and potential competitors have significantly 

greater resources than Promethean, which may allow them to respond to 

technological or market changes more rapidly than Promethean is able to. 

Other competitors may bring to market low cost, lower specification products 

as a means to enter the global marketplace for interactive technologies. 

Mitigating actions 

The Group has made a strategic decision to diversify into non-education 

markets, including the business training sector. While not immune to global 

economic conditions, this sector is expected to recover more quickly than 

the public sector and Promethean is well positioned to exploit any upturn 

in spend on training. 

Promethean also engages with education bodies and customers in order 

to understand their expectations and sentiments. Business plans are 

flexed to reflect changes in the forward views of a range of internal 

and external sources. 

The reorganisation in late of Promethean’s research, product 

development and product management functions into a structure that 

reflects the three core product groups (interactive display and collaborative 

systems, learner response and assessment and online community and 

content) has continued to bed in during . Processes to ensure 

cross-divisional alignment are in place and senior resource has been 

secured to strengthen leadership in some areas. 

Promethean invests a substantial proportion of its revenue in research 

and development and maintains a competitor intelligence team to monitor 

trends and innovations in the marketplace. 

Promethean competes on the technology, functionality, quality and reliability 

of its products, its after-sales support offer and its online community and 

content offer in the form of Promethean Planet. has seen investment 

in the Promethean Academy, which was established to promote and deliver 

high quality end-user training in the effective use of the Group’s products. 

Promethean’s interactive whiteboards and other products are available in 

various specifications to suit the needs of different markets and 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, particularly in markets 

where the Group is seeking to secure market share. 

Promethean has entered into a number of strategic partnerships during 

the year to widen its range of services. The Board believes that these 

will offer a significant opportunity to create a competitive advantage 

for the Group.



Indirect sales model 

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 model means that Promethean’s 

sales performance is highly dependent on the efforts of its distributors 

and resellers in generating leads, managing them through to completion 

and providing high levels of service in their installation of Promethean’s 

products and after-sales support. 

Competition for the services of good quality distributors and resellers 

in a number of Promethean’s new markets is keen and may provide 

a challenge as the Group seeks to expand. Business growth may also 

strain the capacity of existing distributors and resellers and/or Promethean’s 

relationships with them, with consequent risk of operational disruption 

and increased costs. 

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. 

Sectoral and geographical concentration of revenue 

Promethean’s business has historically been dependent upon adoption 

and eventual replacement of interactive learning technology, mainly in 

the form of interactive whiteboards, in the K– education sector. 

The Group’s North America business segment generated % of overall 

Group revenue in , principally from the US where uncertain economic 

conditions and intense competition for market share present an ongoing 

threat that could have a significant impact on overall Group revenue. 

Learn about Promethean's risk identification and 

management processes in the Corporate Governance 

section on pages 35 to 39. 


Channel management teams are in place to manage relationships 

with business partners and the Group operates an accreditation scheme 

for its directly contracted distributor partners that includes training 

in Promethean’s products and services, including installation. 

Promethean also operates a reseller accreditation scheme to ensure 

that appropriate levels of product knowledge, technical competence 

and service performance can be achieved by partners with no direct 

contractual relationship. 

Promethean’s Partner Portal, an intranet-style service, provides business 

partners with access to a wide range of information and assistance in areas 

such as sales and marketing techniques. 

Formal business plans are agreed with larger business partners and channel 

managers monitor progress and set improvement plans where performance 

falls short of expectations. 

The Group has made a strategic decision to diversify into non-education 

markets, including the business and government training sectors, thereby 

reducing reliance on the K– education sector. Whilst this initiative 

is currently focused predominantly on the US, opportunities are being 

identified and successfully exploited in various countries around the world. 

has also seen significant investment in personnel, infrastructure 

and processes in the International sales division with the aim of growing 

Promethean’s presence in markets outside the US and western Europe. 


24 



Business Risks continued 


Principal risks and uncertainties continued 

Strategic and Market Risks continued 

Expansion into new geographical markets 

The Group intends to continue expanding into geographical markets 

outside the US and the UK. This expansion brings with it a variety 

of risks, including: 

· difficulties in securing the services of reputable distributors or resellers 

of adequate size, financial stability and scalability; 

· compliance with foreign laws and regulations; 

· trade restrictions and procedures affecting marketing, certification, 

licensing or pricing of products; 

· complex and costly public tender and procurement requirements; 

· lower per capita budgets for education technology and price expectations; 

· differing technology standards or end-user requirements; 

· adverse tax consequences; and 

· logistical challenges of servicing new markets, including disruption 

of the transportation and shipping infrastructure and fluctuations 

in freight costs. 

Emerging markets bring further risks including political, economic 

or financial instability, under-developed legal and regulatory systems 

and inadequate infrastructure. 

Operational Risks 

Product availability and quality and product-related liabilities 

Accurate forecasting of sales volumes and product/configuration mix are 

essential to maintaining optimal product availability while minimising the 

risk of obsolescence and write-offs. 

Any significant failure of Promethean’s or suppliers’ quality control processes 

may result in significant costs and management’s attention may be diverted, 

to the detriment of business operations. 


A thorough due diligence and on-boarding process is in place for 

evaluation and induction of new distribution partners. 

Any new contracts issued are checked with local lawyers before being 

issued and clearly state the requirement for distribution partners to comply 

with relevant laws and other regulations. 

The Group Legal team provides advice about trade restricted countries 

or zones and these are avoided for marketing and sales activities. 

Local partners are engaged to assist on complex tender requirements. 

Promethean offers both low cost and premium solutions to accommodate 

variations in per capita budgets. 

Most non-UK/US investments are via branch or representative offices 

rather than legal entities to reduce exposure to local tax and business 

registration requirements. 

A significant proportion of shipments are on an ex-works basis from 

Promethean’s China factory, which reduces the logistical challenges and 

impact of fluctuations in freight costs by passing this risk to Promethean’s 

distribution partners. 

Risk factors are monitored and factored into quarterly reviews of strategy 

and business forecasting. 

Sales forecasts are flexed by manufacturing planners based on historical 

experience and stock turns for most products are closely monitored. 

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. 

The Group maintains insurance against damage and consequential loss 

to third party property and provisions are made against the expected 

cost of future warranty claims. 

Intellectual property rights 

The success of Promethean’s products depends in part on the Group’s 

ability to protect and defend its rights over current and future intellectual 

property in the form of technologies, processes or products. 

The Group may also be unable to adequately protect itself from intellectual 

property infringement or effectively enforce its rights in certain jurisdictions. 

Any claims that Promethean’s products or processes infringe the 

intellectual property rights of others could, regardless of the merit or 

ultimate resolution of such claims, lead to significant legal costs, negative 

publicity and diversion of management and technical personnel. 

Promethean has numerous patents either granted or pending, which 

cover certain technology related to its products. It also owns trademark 

registrations in respect of its key brands covering a wide range of territories. 

However, not all elements of Promethean’s product and service offering 

can be fully protected by intellectual property rights. 

Management responsibility for all intellectual property matters has been 

reorganised during to improve co-ordination across the Group 

and ensure that intellectual property rights are appropriately secured. 

The Group has in place systems to safeguard against infringement of other 

parties’ intellectual property rights and maintains insurance cover against 

such claims.




Human capital 

Attracting, retaining and motivating suitable high-calibre personnel is 

critical to the long-term success of Promethean’s business. Competition 

for such individuals, particularly qualified technical personnel, is intense 

and is expected to remain so in the short to medium term. 

Promethean aims to provide remuneration packages and working conditions 

that will attract and retain personnel of the required calibre. 

The addition of the Maidenhead and Seattle offices during provided the 

Group with access to further pools of technical and other talent, supplementing 

the catchment areas of the Group’s other UK and US locations. 

Business disruption 

Promethean’s manufacturing facility in Shenzhen, China comprises two A business continuity risk assessment of the Shenzhen facility was 

co-located but independent units that could be affected by natural disasters, completed in and is regularly updated. 

infrastructure failures and other natural or man-made events for which 

A policy of dual-sourcing for critical components is in place. 

the Group may not be fully insured. 

Recovery plans for Promethean’s core IT systems are in place and, in the event 

Promethean also relies on third party suppliers for components and certain 

of loss of use of one of the Group’s office buildings, employees would be 

finished products. 

relocated or instructed to work from home via remote access. 

The Group is heavily reliant on information technology systems for management 

Promethean maintains insurance cover against business disruption, 

of key processes and effective communication both internally and externally. 

including cover for loss of profits. 

Ethical business practices 

Promethean’s competitors may operate according to business customs and 

practices that are acceptable locally in certain countries, but are prohibited 

by laws and regulations applicable to Promethean or by its corporate 

policies and procedures. 

The Group is also exposed to the risk of misconduct and/or poor business 

practices on the part of its employees, distributors and resellers, which may 

lead to reputational damage. 

Financial Risks 

Credit defaults 

Promethean is exposed to credit default risk through the credit lines 

it extends to its distributors and resellers. 

Liquidity and capital structure 

Promethean may be unable to access sufficient funds to meet its short-term 

working capital requirements and/or finance investing activities. 

The Board is committed to high ethical standards and Promethean has 

in place relevant policies and procedures. 

Undertakings regarding compliance with relevant laws, regulations and 

Promethean’s policies on ethical matters are included in Promethean’s 

standard distributor and reseller contracts. Breach of such regulations 

is specifically identified as grounds for termination of these contracts. 

Unethical behaviour by Promethean employees is not tolerated and, 

where identified, is dealt with under Promethean’s disciplinary procedures. 

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 insures against credit risk. 

The Group undertakes regular cash flow forecasting over short, medium 

and long-term horizons and maintains appropriate cash reserves. 

Bank facilities are kept in place so they are available for draw down 

as and when required and compliance with covenants on existing 

facilities is routinely monitored to ensure their continued availability. 

Active and open dialogue with both existing and prospective investors 

is maintained. 


26 



Business Risks continued 


Principal risks and uncertainties continued 

Financial Risks continued 

Exchange rates 

Promethean generates substantial revenues in US Dollars and Euros. 

Fluctuations in exchange rates, particularly between Pounds Sterling and 

the US Dollar and Euro may affect the Group’s reported results when 

such transactions are translated into Pounds Sterling for financial 

reporting purposes. 

Promethean has historically priced its products in US Dollars in many 

markets even though distributors/resellers may price the products in 

local currency. Such pricing may prove uncompetitive if local currencies 

fall in value against the US Dollar, which may compel Promethean to 

reduce prices in those markets. 


The Group purchases the majority of its raw materials and incurs a 

substantial proportion of its operating costs in US Dollars, thereby 

offsetting a proportion of US Dollar sales and reducing net foreign 

exchange exposure. Net exposures are reviewed over a rolling 

twelve-month period. 

Promethean also uses hedging contracts, primarily to protect against the cash 

flow impacts of currency exchange rate risks, but also to mitigate the profit 

and loss effect. These may not fully offset any financial impact arising from 

currency variations. 

Regulatory Risks 

Public sector procurement, anti-bribery and anti-corruption regulations 

Sales to public sector purchasing authorities are generally subject to a range 

of regulations, requirements and limitations relating to the conduct of business 

relationships and the formation of purchasing contracts. The exact nature 

of these requirements and limitations varies extensively between jurisdictions. 

Despite setting and regularly communicating high ethical standards, 

Promethean is exposed to the risk that individual employees or associated 

parties may act improperly and in contravention of regulations such as 

the UK Bribery Act (UKBA) or the US Foreign Corrupt Practices 

Act (FCPA). Penalties on conviction under such legislation are potentially 

severe for both the company and individual officers and directors. 

Internal policies require all employees to ascertain what rules and regulations 

apply to any transaction with another party and to ensure that these 

are observed. 

The Group has developed a training programme to increase awareness 

and understanding of UKBA and FCPA. This includes online training for 

employees in “high risk” roles and electronic monitoring of all employees’ 

acknowledgement of the Group’s Code of Ethics, which will be rolled out 

in early . 

Environmental regulations 

Promethean’s European activities require it to comply with directives 

of the European Parliament including Directive //EC on the 

Restriction of the Use of Certain Hazardous Substances in Electrical 

and Electronic Equipment (RoHS) and Directive //EC on 

Waste Electrical and Electronic Equipment (WEEE). The Group 

is also subject to environmental regulation in the US, China 

and elsewhere. 

Liability for information on websites 

The law relating to liability of online services companies for information 

carried on, or disseminated through, their services is complex due to the 

number of legal jurisdictions involved. Claims based on the nature and 

content of information disseminated could be made against the provider 

of an online network, such as Promethean, under the laws of the UK 

or other jurisdictions. 

Promethean has in place systems to monitor compliance with European 

directives and other regulations. Environmental management systems 

in the Group’s UK operations are ISO accredited. 

Website terms and conditions are drafted to seek to exclude or limit 

Promethean’s responsibility for online material. 

Online forums are moderated by Promethean staff and, in the case of 

user created groups, group members themselves. All forums incorporate 

a reporting system for offensive and other inappropriate material.


Corporate Responsibility 

Recognising that Promethean’s activities and operations bring the Group into 

contact with a diverse range of direct and indirect stakeholders, the Board 

aspires to standards of corporate citizenship that exceed simple compliance 

with regulatory requirements. 

Highlights 

 

 

 

 

Formalisation of objectives and 

strategy ongoing 

Strong ethical culture established 

Promethean’s role as a thought 

leader in 21st century education 

increasingly recognised 

High safety, health, welfare and 

environmental standards embedded 

across the Group 

Social, environmental and governance risks are 

considered as part of the Group’s risk assessment 

processes and, where appropriate and practicable, 

the Group seeks to maximise positive impacts on 

its stakeholders and minimise any negative impacts. 

Promethean’s corporate responsibility programme 

has continued to develop during with the 

establishment of a working group to formally 

define objectives and strategy in various areas. 

This builds upon existing initiatives centred 

around a sabbatical programme under which 

certain employees will be encouraged to work 

with schools and community groups. 

People and culture 

Promethean is an equal opportunities employer 

and has in place appropriate policies and best 

practice to encourage diversity in the workplace 

and establish a working environment that is free 

from all forms of discrimination. 

As a matter of policy, the Group supports 

the recruitment, employment and retention 

of disabled people. Any application for 

employment by a disabled person is given full 

and fair consideration, having regard to the 

applicant’s particular aptitudes and abilities. 

Career development, training and promotion 

opportunities available to disabled applicants 

and any person who becomes disabled while 

employed by the Group are the same as those 

available to other employees in comparable 

roles and reasonable adjustments are made 

to accommodate the needs of such employees. 

The majority of employees receive benefits 

including private healthcare, life assurance and 

pension/retirement plans. Benefit packages are 

benchmarked against relevant local norms in 

the main employment markets in which the 

Group operates. 

All employees share in the Group’s success 

through bonus or commission schemes and 

other reward and incentive schemes, both formal 

and informal. These reflect an appropriate 

balance between personal performance and 

the Group’s performance against financial 

and market share targets. 

All employees formally review their performance, 

competence and development needs with their 

line manager at least twice a year. Promethean 

sponsors employees to undertake approved 

training courses, such as those leading to relevant 

professional qualifications, and provides a range 

of in-house training programmes. 

Employees are provided with regular updates 

about corporate and functional strategy, 

initiatives and business performance via email 

circulars, briefings and “Town Hall” meetings, 

which include open Q&A sessions. Recordings 

of all these meetings are accessible to all 

employees via the Group’s intranet. 

Following completion in November 

of the second Denison employee engagement 

survey, in which over % of the eligible senior 

management population participated, a series 

of leadership development and engagement 

workshops has been delivered during to 

further improve communication and alignment. 

Ethical values 

Promethean is committed to high standards of 

ethical conduct and expects similar standards from 

its suppliers and business partners. The Group’s 

Code of Ethics sets out clear guidelines in a broad 

range of areas including behaviour in the workplace, 

interaction with suppliers, customers and 

competitors, and dealing in Promethean securities. 

Promethean also has in place a whistle-blowing 

policy and procedure, which allows employees 

and others to raise, in confidence, any concerns 

about unethical behaviour on the part of the 

Group or organisations and individuals 

associated with it. 


28 



Corporate Responsibility continued 

Ethical values continued 

The advent of the Bribery Act triggered 

a comprehensive review of measures in place 

to combat bribery throughout Promethean’s 

global activities. A programme to further 

improve awareness of bribery and corruption 

risks, deliver appropriate training and establish 

formal monitoring processes was developed 

during and will continue to be rolled out 

in . 

Philanthropy and leadership in education 

As Promethean has expanded its global reach 

it has been increasingly actively engaged in the 

development and promulgation of st century 

learning principles and promoting opportunities 

to transform education that arise through charitable 

giving and corporate responsibility more generally. 

It is imperative that any philanthropic effort 

is properly targeted and Promethean works 

closely with leading individuals and philanthropic 

organisations to maximise the educational benefits 

delivered by their deployment of funding and 

other resources. This has included organisations 

such as the Bill and Melinda Gates Foundation, 

the Morgridge Family Foundation, the Supriya 

Jindal Foundation and Teachers Without Borders 

during . 

Promethean’s Education Strategy Group has 

continued to gain recognition as an effective 

forum for leading figures in education to discuss 

the relative effectiveness of education technologies. 

It also sponsors research at a number of universities 

and publishes “Thinking Deeper” white papers on 

a range of educational topics. These are available 

free of charge via Promethean’s corporate website 

(www.prometheanworld.com/education). 

Promethean sponsors the Global Educator 

Leadership Programme, providing free advice 

to governments around the world and, 

in conjunction with Cisco, provides facilities for 

leading thinkers in the education field to discuss 

ideas and experiences through the Education 

Fast Forward programme. Recent events have 

included participants from as far afield as Brazil, 

China, Australia and Canada. 

Promethean remains a partner in the European 

Commission funded “Innovative Technologies 

for an Engaging Classroom” project (iTEC), 

the largest pan-European validation of interactive 

classroom technology in schools ever undertaken. 

In the US, Promethean is a founder corporate 

member of the “Educate to Innovate” campaign, 

a collaborative programme involving over 

organisations which aims to promote effective 

teaching of science, technology, engineering and 

mathematics (STEM) subjects in schools across 

the US. 

As part of its commitment to STEM subjects, 

Promethean is a sponsor of the Bloodhound SSC 

project to develop a supersonic car and, in the 

US, supports the Aerospace States Association’s 

“Real World Design Challenge”, which 

challenges teams of high school children 

to design an energy-efficient aircraft. 

Promethean Planet, whilst intended primarily 

for educators, is available free of charge to anyone 

with an interest in education and is a rich source 

of educational material, much of which is free 

of charge. 

Community engagement 

Promethean and its employees engage with young 

people around the world through involvement 

in community and charitable organisations and 

initiatives, donation of products and other resources. 

The following are examples of such engagement 

during : 

· continued participation in the “Centers of 

Excellence” initiative established by the Boys 

and Girls Club of America by donation of 

Promethean equipment and training and 

ongoing donation of a portion of the 

proceeds from Promethean’s online store; 

· partnership with the US National Association 

of Black School Educators through which 

schools in key communities receive Promethean 

equipment and training to modernise classrooms 

and make the best use of interactive technology 

in teaching and learning; 

· partnership with the US National Parent Teachers 

Association, through which Promethean matches 

funds raised by schools’ own sponsorship 

schemes to support purchase of a range 

of ActivClassroom products; 

· partnership with the US National Underground 

Railroad Freedom Center to deliver new history 

resources into classrooms via Promethean 

Planet and provide interactive technology 

in the Center’s museum; and 

· working with National Geographic on a 

schools conservation contest that saw the 

winning school rewarded with Promethean 

products and teaching resources. 

Safety, health, welfare and environment 

The Group has adopted UK health and safety 

regulations as its global corporate standard and 

its safety philosophy is implemented through 

training in safe working practices, awareness 

campaigns and management intervention. 

Employees are encouraged to raise safety-related 

concerns either with their line manager or through 

the local Health and Safety committees in place at 

the each of the Group’s main operating locations. 

Promethean operates rigorous quality standards in 

its product sourcing and manufacturing processes. 

Finished products are also tested and certified 

to confirm they meet or exceed relevant safety 

standards in the countries in which they are sold. 

Employees at Promethean’s Shenzhen factory 

are provided with dormitory accommodation 

and canteen facilities equipped to a higher 

standard than is typically the case in China. 

Promethean’s environmental management systems 

are accredited to ISO in the UK and the 

Group is committed to continual improvement 

of its environmental performance across all 

its operations. 

The Group does not set specific targets, but its 

initiatives have seen sustained reductions in both 

energy use and the amount of waste sent to 

landfill. Waste streams are constantly monitored 

to maximise recycling, which in the UK includes


working with Recycling Lives, a charity that 

recycles scrap metal and electronic equipment 

to provide disadvantaged people with education 

and training in life skills to improve their chances 

of securing employment. 

Customers 

Focus groups and surveys are widely used to gain 

insight into customers’ expectations and their 

experience of Promethean’s products and services. 

The Group carried out significant research across 

almost schools in the US during and 

has followed this in with research efforts in 

the UK, Australia, Finland and the Middle East. 

During , Promethean’s IDCS division 

launched a long-term customer experience 

project to gain better understanding of the 

end-user base, users’ experience of the Group’s 

products and how this might be improved. 

An online survey generated over , responses 

from users in over countries and an ongoing 

programme of interviews and observation 

sessions has been established. 

After-sales support has been significantly enhanced 

with the roll out of a new warranty programme 

during and continued development of an 

enhanced training offer to better help customers 

unlock the potential value of their investment 

in interactive technologies. 

Suppliers 

Promethean is committed to fair and open 

negotiation of purchasing contracts and seeks 

to establish long-term mutually beneficial 

relationships with its suppliers. 

The Group engages with existing and potential 

suppliers of components and finished products 

to assess their corporate responsibility 

performance in areas such as child labour 

and environmental protection. 

Supplier payment terms vary by operating 

company reflecting the different countries 

in which they operate. It is Group policy that 

suppliers are aware of such terms of payment 

and that payments to them are made in 

accordance with these, provided that the 

supplier is also complying with all the 

relevant terms and conditions. 

The Company has no trade payables at 

December (: None). Group 

creditor days at December were 

days (: days). 

Donations 

It is Group policy not to make political donations 

and no such donations were made during the year. 

The Group made a small number of low-value 

monetary donations to UK-based charitable 

institutions during the year. Donations of 

ex-demonstration stock items and other materials 

to institutions and good causes such as those 

described above in the UK and US are not 

specifically recorded but are believed to have 

amounted to less than £, during the 

year (: less than £,). 


30 



Board of Directors 

Graham Howe () 

Chairman 

Jean-Yves Charlier () 


Neil Johnson () 

Chief Financial Officer 

Appointment date 

Graham Howe became 

Promethean’s Chairman 

in July . 

Jean-Yves Charlier joined 

Promethean in . 

Neil Johnson joined Promethean 

in November as Chief 

Financial Officer. 

Experience 

Graham was the co-founding 

Director of Orange, planning with 

Hans Snook the strategy that led to 

the launch of Orange in April 

and, as Chief Financial Officer, 

leading Orange’s debut flotation in 

March . In June , Orange 

became the youngest company ever 

to enter the FTSE . 

Graham became Orange’s Deputy 

Chief Executive and Chief Operating 

Officer before leaving in . 

Prior to Orange, Graham held senior 

positions at Hutchison Telecom, 

First Pacific Company and Touche 

Ross Management Consultants. 

He has also served on the board 

of Cable and Wireless plc as Senior 

Independent Director. Graham 

has pursued a number of charity 

fundraising projects in recent years 

including participating in the 

New York Marathon, cycling from 

Lands End to John O’Groats, 

walking unsupported the last degree 

to the North Pole and more recently 

climbing Mount Kilimanjaro. 

Graham gained a Bachelor 

of Commerce degree from the 

University of Birmingham and 

is a member of the Institute 

of Chartered Accountants. 

Jean-Yves has led Promethean’s 

expansion as a global leader in 

interactive learning technology, 

driving its strategy, its R&D 

and key initiatives to maintain 

its technology lead and its 

position as a leader in its field. 

Before joining Promethean, 

Jean-Yves was CEO of Colt 

Telecommunications, the alternative 

business telecommunications 

company in which Fidelity holds 

a majority stake. After leading 

the turn-around of Colt he 

returned to Fidelity International 

as a Managing Director. 

Before Fidelity International, 

Jean-Yves was Chief of Operations 

of BT Global Services, and prior 

to that he was President, Marketing 

and Sales, at Equant, a global 

telecoms network services company. 

He is currently also a member of 

the Vivendi SA supervisory board 

and has held board positions with 

several companies including Colt 

Telecommunications and Radianz, 

a Reuters joint venture. 

Jean-Yves holds a BA summa cum 

laude from the American College 

in Paris and an MBA from the 

Wharton Business School. 

Neil manages the finance and 

information systems across the 

Group and has been instrumental 

in implementing the Group’s 

strategy and globalising the business 

as it has become an increasingly 

international leader in interactive 

learning technology. 

Before joining Promethean, Neil was 

Group Financial Controller at British 

Energy Group plc during its complex 

financial restructuring and re-listing to 

the FTSE . Prior to this, Neil was 

the Finance Director of Teradyne Inc, 

a NYSE listed leading global supplier 

of electronic hardware and software 

test equipment. 

Earlier in his career, Neil was 

European Finance Director for 

GenRad Inc. and held various 

senior finance positions at 

Courtaulds plc, both in Europe 

and the US, and at Deloitte in 

Birmingham, United Kingdom. 

Neil holds a First Class Honours 

degree in Electrical and Electronic 

Engineering from Aston University 

and is a member of the Institute 

of Chartered Accountants.


Lord Puttnam () 

Senior Independent Director 

David Puttnam, Lord Puttnam CBE, 

was appointed a Non-Executive 

Director of Promethean in 

September . 

Lord Puttnam was the first 

Chancellor of the University 

of Sunderland from until 

, when he moved on to 

become Chancellor of the Open 

University. In , he founded 

the National Teaching Awards and 

became its first Chairman – retiring 

in . From to he 

served as the inaugural Chair of 

the General Teaching Council. 

Prior to that he had served for ten 

years as Chairman of the National 

Film and Television School; he also 

founded Skillset, which trains young 

people for careers across the whole 

of the audio-visual sector. Lord 

Puttnam was Deputy Chairman 

of Channel from February 

to January . 

He is currently Chairman of 

The Sage Gateshead and a Trustee 

of the Eden Project and the 

Thompson Foundation, having 

also served on the foundation 

board of the World Economic 

Forum. From until , 

he served as President of UNICEF 

UK. He was formerly a Trustee 

of both the Tate Gallery and 

the Science Museum. 

He was awarded a CBE in , 

was knighted in and was 

made a life peer in . 

Tony Cann () 

Non-Executive Director 

Tony Cann is the founder and was 

the first Chairman of Promethean 

until July . 

Tony is Chairman of several 

other private companies, a trustee 

of The Ruskin Foundation and 

a member of the Strategy Board 

of the Institute of Effective 

Education at the University of York, 

which was founded and is supported 

by Tony's family trust, the Bowland 

Charitable Trust. 

Tony was awarded a CBE for his 

work in education and training and 

has received an Honorary Doctorate 

from Lancaster University. 

Philip Rowley () 


Philip Rowley was appointed 

as Non-Executive Director of 

Promethean in October . 

Philip is Chairman of HMV Group 

plc and a Non-Executive Director 

of ARM Holdings plc and Misys plc. 

He is also Chairman of Livestation 

Limited and Pouncer Media Limited. 

Philip held a number of roles in AOL 

Europe, the internet services provider, 

from May until February , 

becoming Chairman and CEO. 

He was Group Finance Director of 

Kingfisher plc from to 

and Deputy Chief Executive and 

Finance Director of Kingfisher’s 

General Merchandise Division from 

to . Previous roles include 

Executive Vice President and CFO 

of EMI Music Worldwide. 

Philip is a qualified Chartered 

Accountant and holds a Bachelor 

of Science degree in Chemical 

Engineering from Imperial 

College, London. 

Dante Roscini () 


Dante Roscini was appointed 

as Non-Executive Director of 

Promethean in October . 

Dante Roscini is the L.E. Simmons 

Faculty Fellow at the Harvard 

Business School. Professor Roscini 

spent years in investment 

banking and was Head of European 

Capital Markets for Goldman Sachs, 

Head of Global Equity Capital 

Markets and Head of the European 

Capital Markets and Financing 

Group for Merrill Lynch where he 

was also a member of the Capital 

Commitments Committee and 

of the Managing Directors 

Promotions Committee. Dante 

was Country Head of Italy and 

Chairman of European Capital 

Markets for Morgan Stanley and 

a board member of Morgan Stanley 

International Bank. 

Professor Roscini holds an MBA 

from Harvard and a summa cum 

laude Laurea degree in Nuclear 

Engineering from the University 

of Rome, Italy. 


32 



Shareholder and Corporate Information 

Financial calendar 

Accounting period end 31 December 2011 

Annual Report circulated March 2012 

Annual General Meeting 18 April 2012 

Record date for final dividend 10 April 2012 

Interim accounting period end 30 June 2012 

Internet 

The Group operates a corporate website which 

can be found at www.prometheanworld.com. 

This site is regularly updated to provide 

information about the Group, and all of the 

Group’s press releases and announcements 

can be found on the site. 

Registrar 

Any enquiries concerning your shareholding 

should be addressed to the Company’s Registrar. 

The Registrar should be notified promptly of any 

change in a shareholder’s address or other details. 

Share price information 

The latest information on the ordinary share 

price is available in the Investors area of the 

corporate website. Closing share prices for the 

previous business day are quoted in certain daily 

newspapers and, throughout the working day, 

time delayed share prices are available on the 

London Stock Exchange’s website. 

Share dealing services 

The sale or purchase of shares must be done 

through a stockbroker or share dealing service 

provider. The London Stock Exchange provides 

a “Locate a broker” facility on its website which 

gives details of a number of companies offering 

share dealing services. For more information, 

please visit the Private investors section at 

www.londonstockexchange.com. Please note 

that the Directors of the Company are not 

seeking to encourage shareholders to either 

buy or to sell shares. Shareholders in any doubt 

about what action to take are recommended 

to seek financial advice from an independent 

financial adviser authorised pursuant to the 

Financial Services and Markets Act . 

Company Secretary 

Requests for further copies of the Annual Report 

and Accounts, or other investor relations enquiries, Shareholder security 

should be addressed to the registered office. 

Shareholders are advised to be wary of any 

unsolicited advice, offers to buy shares at a 

discount, or offers of free reports about the 

Company. Details of any share dealing facilities 

that the Company endorses will be included 

in Company mailings or on our website. 

More detailed information can be found 

at www.moneymadeclear.fsa.gov.uk. 

Payment of dividends 

Shareholders may find it more convenient to make 

arrangements to have dividends paid directly to 

their bank account. The advantages of this are that 

the dividend is credited to a shareholder’s bank 

account on the payment date, there is no need to 

present cheques for payment and there is no risk 

of cheques being lost in the post. To set up a 

dividend mandate or to change an existing 

mandate, please contact Equiniti, our registrar, 

whose contact details appear on this page. 

Alternatively, shareholders can log on to 

www.shareview.co.uk and follow the 

online instructions. 

Registered office 

Promethean House 

Lower Philips Road 

Blackburn 

Lancashire BB TH 

Tel: 

www.prometheanworld.com 

Company registration number 

 

Bankers 

Lloyds Bank plc 

Spring Gardens 

Manchester M EN 

Tel: 

Solicitors 

Freshfields Bruckhaus Deringer LLP 

Fleet Street 

London ECY HS 

Tel: 

Auditor 

KPMG Audit plc 

Edward VII Quay 

Navigation Way 

Ashton on Ribble 

Preston PR YF 

Tel: 

Joint financial advisers 

and stockbrokers 

Investec Bank plc 

Gresham Street 

London ECV QP 

Tel: 

JP Morgan Cazenove 

Aldermanbury 

London ECV RF 

Tel: 

Registrar 

Equiniti 

Aspect House 

Spencer Road 

Lancing 

West Sussex BN DA 

Tel:



The Directors present their report and the 

audited financial statements for the year 

ended December . The Business Risks 

Statement, Corporate Responsibility Statement, 

Corporate Governance Statement and Directors’ 

Remuneration Report all form part of this report. 

Principal activities 

The principal activities of Promethean World Plc 

and its subsidiary undertakings are the supply 

of education technology solutions including the 

design, manufacture and supply of electronic 

equipment, specifically innovative interactive 

whiteboards, interactive assessment technologies 

and a wide range of complementary audio-visual 

equipment and educational software. 

The Group has employees in jurisdictions 

around the world. The Company has a number 

of overseas subsidiary companies which are 

detailed in note on page . The Group has 

established representative offices in Hong Kong 

and Mexico and operates using branch offices 

in Australia, Bahrain and Singapore. 

Annual review of the business 

A detailed review of the business and an 

indication of likely future developments in 

the Group is provided in the Chief Executive 

Officer’s Review on pages to and 

the Financial Review on pages to . 

The Group profit for the year ended 

December after taxation was £,, 

(: £,,). The Company made a profit 

for the year after taxation of £,, (: 

from January to December : 

£,,). 

Research and development 

The Group recognises the importance of innovative 

new products as a driver for business growth and 

has a proven track record of consistent innovation 

and product development as outlined in the Chief 

Executive Officer’s Review on pages to . 

Significant shareholders 

Share capital 

As at December share capital comprised 

million ordinary shares of p each. There 

is only one class of share and all shares are fully 

paid. Details of the Company’s share capital are 

shown in note to the consolidated financial 

statements on page . 

Purchase of own shares by Employee 

Benefit Trust 

Kleinwort Benson (Jersey) Trustees () Limited 

as trustees of the Chalkfree Employee Benefit Trust 

(“EBT”) hold ordinary shares in the Company on 

trust for the Company which are primarily issued to 

employees to satisfy the Company’s obligations in 

relation to its share schemes. During the year the 

EBT acquired ,, shares for an aggregate 

consideration paid of £,. 

Details of own shares held can be found in note . 

Restrictions on transfer of shares 

in the Company 

The underwriting agreement executed in 

connection with the IPO required the Directors, 

the Senior Management Team and their 

connected persons to seek the prior approval 

of the IPO sponsor in relation to any sale 

or transfer of shares in the period from 

March to March . 

Tony Cann and the Company have entered into 

a relationship agreement which regulates the 

ongoing relationship between Tony Cann and the 

Company. This is to ensure that, inter alia, Tony 

Cann exercises his powers and uses reasonable 

endeavours to enable the Company to operate and 

make decisions for the benefit of shareholders as a 

whole provided that doing so does not affect, limit 

or constrict Tony Cann’s fiduciary duties as a 

Director of the Company. 

There are no restrictions on the transfer of shares 

in the Company other than those which may from 

time to time be applicable under existing laws 

and regulations (for example under the Market 

Abuse Directive). 

In addition, pursuant to the Listing Rules of 

the Financial Services Authority, directors of the 

Company and persons discharging managerial 

responsibility are required to obtain prior 

approval from the Company to deal in the 

Company’s securities and are prohibited 

from dealing during close periods. 

Dividend 

The Board aims to have a progressive and sustainable 

dividend policy, which it will review in the light of 

prevailing market conditions. In line with this policy 

and following the payment of an interim dividend 

of . pence per ordinary share (: . pence 

per share), the Board is proposing a final dividend of 

. pence per ordinary share (: . pence per 

share), giving a total ordinary dividend for the year 

ended December of . pence per share, 

up .% on the total dividend of . pence per 

share for . 

The final dividend is expected to be paid on 

May to shareholders on the register 

at the close of business on April . 

The ex-dividend date is April . 

Significant shareholders 

Significant shareholdings in the Company as at 

January are set out in the table below. 

Other Directors’ interests in shares of the 

Company are disclosed within the Directors’ 

Remuneration Report on pages to . 

Voting rights 

In a general meeting of the Company, on a show 

of hands, every member who is present in person 

or by proxy and entitled to vote shall have one 

vote. On a poll every member who is present in 

person or by proxy shall have one vote for every 

share of which they are the holder. The AGM 

notice gives full details of deadlines for exercising 

voting rights in respect of resolutions to be 

considered at the meeting. 

The Company has been notified of the following significant shareholdings (being holdings of % or more of the ordinary share capital) as at January : 

Number of 

shares 

% of issued 

share capital 


Directors’ Report Financial Statements 

Tony Cann 66,081,002 33.04 

Aberforth Partners 30,224,851 15.11 

Graham Howe 10,891,162 5.45 

Norges Bank 7,777,875 3.89 

Wolf Opportunity Fund 7,231,047 3.62

34 



Directors’ Report continued 

Voting rights continued 

Directors remove them from office by notice in Articles of Association 

writing served upon them, (iii) they are or have 

No voting rights will be exercised by or on behalf 

The Company’s Articles of Association may only 

been suffering from mental ill health and a court 

of the Company in respect of any own held shares. 

be amended by special resolution at general 

order is made which wholly or partly prevents that 

meetings of shareholders. 

person from exercising any powers or rights which 

Directors 

they would otherwise have or a registered medical 

The Directors of Promethean World Plc, practitioner who is treating that person gives a Going concern 

all of whom held office throughout the year, written opinion to the Company stating that the The Chief Executive Officer’s Review on pages 

can be found on pages and . 

person has become physically or mentally incapable to outlines the business activities of the 

of acting as a Director and may remain so for more Group along with factors which may affect its 

The Board delegates certain functions to 

than three months, (iv) a bankruptcy order is made future development and performance. The Group’s 

sub-committees, details of which are set out 

against them or they make any arrangement or financial position is discussed in the Financial Review 

in the Corporate Governance Statement on 

composition with their creditors generally, (v) they on pages to along with details of its cash 

pages to . 

are prohibited from being a Director by law, (vi) flows, liquidity and available borrowing facilities. 

they are absent from Board meetings for more than 

Having made appropriate enquiries, the Directors 

Change of control 

six consecutive months without leave and their 

are satisfied that the Company and the Group 

None of the Directors’ service contracts contain 

alternative Director (if any) has not attended in 

have adequate resources to continue in operational 

provisions providing for compensation for loss 

their place and the other board members resolve 

existence for the foreseeable future. Accordingly, 

of office or employment that occurs because 

that their office should be vacated, (vii) they offer 

they have continued to adopt the going concern 

of a takeover. 

themselves for re-election at an Annual General 

basis in preparing the Company and consolidated 

meeting and are not re-appointed at that meeting. 

In the event of a takeover, options issued pursuant 

financial statements. 

to the Company’s Share Schemes will become 

exercisable subject to any relevant performance 

Election and re-election of Directors Disclosure of information to Auditor 

conditional and in the case of the Promethean All of the Directors intend to retire and submit 

The Directors who held office at the date of 

Performance Share Plan and the Promethean themselves for re-election at the next Annual 

approval of this Directors’ Report confirm that: 

Company Share Option Plan as determined General Meeting. 

· so far as they are each aware there is no 

by the Remuneration Committee. 

relevant audit information of which the 

Qualifying indemnity provision 

Company’s auditor is unaware; and 

Interests in significant contracts 

The Company has taken out Directors’ and · each Director has taken all the steps that he 

No Director had an interest in any contract that 

was significant in relation to the Group’s business 

at any time during the period. 

Officers’ insurance in favour of its Directors and 

Officers as permitted by the Companies Act . 

ought to have taken as a Director to make 

himself aware of any relevant audit information 

and to establish that the Company’s auditor 

Corporate Governance Statement is aware of that information. 

Appointment and replacement 

of Directors 

The number of Directors on the Board shall be 

no less than two. There is no maximum number. 

Directors may be appointed by the Company by 

ordinary resolution or by the Board of Directors. 

A Director appointed by the Board of Directors 

holds office until the next following AGM, and is 

then eligible for re-election by the shareholders. 

Under the Articles, at each AGM all those Directors 

who were elected, or last re-elected, at the AGM 

held in the third calendar year before the current year 

shall retire from office and may stand for re-election. 

However the Board has, consistent with the UK 

Corporate Governance Code, adopted a policy 

such that all Directors offer themselves for 

re-election at each Annual General Meeting. 

The Company may by ordinary resolution, 

remove any Director from office. 

Any Director automatically ceases to be a Director 

if (i) they give the Company a written notice 

of resignation, (ii) at least three quarters of the 

The Corporate Governance Statement can 

be found on page . 

Payments to suppliers 

Details of the Group’s policies in respect 

of payments to suppliers are provided in the 

Corporate Responsibility Statement on page . 

Donations 

Information relating to the Group’s charitable and 

political donations is provided in the Corporate 

Responsibility Statement on page . 

Employees 

Details of the Group’s employment policies 

are provided in the Corporate Responsibility 

Statement on page . 

Financial instruments 

Details of the Group’s financial risk management 

is set out in note . 

Auditor 

KPMG Audit Plc has indicated its willingness 

to continue in office and ordinary resolutions 

to re-appoint KPMG Audit Plc as auditor and 

authorise the Directors to fix the remuneration 

payable will be proposed at the forthcoming 

Annual General Meeting. 

Annual General Meeting 

The Annual General Meeting of the Company 

will be held at .am on April at 

Clarion House, Norreys Drive, Maidenhead, 

SL FL. The notice of meeting and details 

of the business to be proposed can be found 

on the Company’s corporate website. 

By order of the Board 

Neil Johnson 

Director 

27 February 2012


Corporate Governance 

The Board is committed to high standards of corporate governance and 

accountability to shareholders and other stakeholders and confirms that 

the Company complied with the UK Corporate Governance Code throughout 

the year ended December . 

Governance framework 

The key elements of Promethean’s governance framework are set out below. Each element is described in more detail within the narrative sections 

of this report. 


Corporate governance framework 

Shareholders page 37 

Other Stakeholders 

AUDIT COMMITTEE 

page 38 

External Auditor 

page 38 

Internal Audit 

page 39 

Highlights 

· No changes in composition of the Board 

or Board committees during the year 

· Board, Chairman and CEO responsibilities 

clearly defined 

· Structured process for evaluation of Board 

and Board committee performance in place 

· Robust internal control and risk 

management processes in place 

REMUNERATION COMMITTEE 

pages 38 and 40 to 48 

BOARD of DIRECTORS pages 35 to 37 

NOMINATION COMMITTEE 

page 38 

Compliance with the UK Corporate 

Governance Code 

The year ended December is the first 

accounting period during which the UK 

Corporate Governance Code (the Code) 

has applied to the Company. 

The Board confirms that the Company complied 

with the Code throughout the year ended 

December and up to the date of approval 

of this report. A detailed account of the provisions 

of the Code can be found on the FRC’s website 

at www.frc.org.uk. 

Specific aspects of the Company’s compliance 

arrangements and how the main principles of 

the Code are applied are set out in detail below. 

Roles and responsibilities 

The Board 

The Board’s principal role is to provide effective 

leadership of the Company, which it does through: 

· close involvement in strategy setting; 

Company Secretariat 

& Group Legal 

Other Advisers 

Executive Management Team 

(SMT) 

Operational Management Team 

· overseeing the alignment of strategic and 

financial plans; 

· defining the nature and extent of risk that 

is deemed acceptable in pursuit of the 

Company’s strategic objectives; 

· regular monitoring of business performance; and 

· approving key operational and other policies. 

The Board is also responsible for overseeing the 

Company’s external financial and other reporting 

and for ensuring that appropriate internal 

controls are implemented and maintained. These 

responsibilities are largely exercised through the 

Audit Committee, whose responsibilities and key 

activities during the year ended December 

are set out on page . 

Certain matters are formally reserved for the 

Board. These include: 

· overall management of the Group, including 

approval of the commercial strategy and 

financial plans and review of performance 

against its stated objectives, budgets and 

other plans; 

Directors’ Report Financial Statements

36 



Corporate Governance continued 

Roles and responsibilities continued 

The Board continued 

· approval of significant changes to the Group’s 

corporate, capital and funding structures, 

its listing status on capital markets, major 

acquisitions and disposals and appraisal of 

any approach regarding a potential takeover 

or combination of the Group or material part 

of the Group; 

· approval of financial reports, trading 

statements, the Annual Report and Accounts 

and resolutions to be put to shareholders at 

general meetings; 

· approval of the Group’s dividend policy 

and proposals for dividend payments; 

· recommendation of Board appointments and 

re-appointments for approval by shareholders; 

· approval of Board committee appointments, 

committee terms of reference and changes 

to the size, structure and composition of the 

Board and Board committees; 

· review of the Board’s performance and that 

of Board committees and individual Directors; 

· approval of the remuneration policy for 

Directors and other senior executives; 

· establishment and maintenance of appropriate 

internal control systems and periodic review 

of their effectiveness; 

· appointment, re-appointment or removal 

of the external auditor; 

· approval of material contracts and capital 

expenditure where required under the 

Group’s authorisation procedures; 

· approval of material policies covering areas 

including, but not limited to, health, safety and 

environment, ethical conduct, risk management 

and release of information to the capital 

markets; and 

· approval of the commencement, defence 

or settlement of material litigation. 

The roles of Chairman of the Board, Chief Executive 

Officer and Chief Financial Officer are separate and 

their respective responsibilities are defined in writing. 

The Chairman 

The principal role of the Chairman is to set the 

Board’s agenda and ensure efficient and effective 

execution of Board business. 

The Chairman is also responsible for ensuring 

effective communication between shareholders 

and the Board. 

The Chief Executive Officer 

The Chief Executive Officer is responsible for 

day-to-day management of the Group via the 

executive management team, collectively referred 

to as the Senior Management Team (the SMT), 

which meets regularly under the chairmanship 

of the Chief Executive Officer. 

The structure of the SMT reflects the Group’s 

key functional and geographic segments, i.e. 

education strategy; marketing; interactive display 

and collaborative systems; learner response 

and assessment systems; online community 

and content; operations; North America and 

International (effectively all markets other than 

North America) education sales regions; business 

and government sales; finance and information 

systems; and human capital. 

Non-Executive Directors 

The Non-Executive Directors provide constructive 

challenge and insight as an integral part of the 

Board’s decision making processes and monitoring 

of management and business performance. 

Board committees 

The Board delegates certain of its responsibilities 

to three sub-committees, as prescribed by the 

Code. These responsibilities are set out in formal 

terms of reference for each committee, which 

are available on the Company’s website 

(www.prometheanworld.com). Membership, 

key responsibilities and activities of each of the 

committees are set out on page . 

The Chairman of each committee reports to the 

Board in relation to the committee’s activities 

and recommendations. Members of the Board 

who are not members of individual committees 

are generally invited to attend meetings of 

those committees at the discretion of the 

respective committee Chairman. However, 

they are not permitted to vote in respect 

of committee business. 

Board composition 

There has been no change in the composition 

of the Board or any of the Board committees 

during the year. 

The Board collectively has a wide range of 

relevant business and financial experience, 

including international experience, that 

is commensurate with the needs of a 

multi-national company. 

Biographies of individual Directors are provided 

on pages and and their respective Board 

and Committee responsibilities are outlined 

on pages to . 

The Board is satisfied that the size of the Board 

and its committees and the balance of executive 

and non-executive members is such that no 

individual or small group of individuals can 

unduly influence its decisions. 

The Company operates a policy of requiring all 

Directors to stand for re-election on an annual 

basis. This policy is reviewed annually. 

Independence and conflicts of interest 

The Board is satisfied that the Chairman and all 

the Non-Executive Directors, except Tony Cann, 

are independent according to provision B.. 

of the Code. On this basis, half the Board, 

excluding the Chairman, is made up of 

Non-Executive Directors who the Board 

considers to be independent. 

Whilst he has previously held a number of senior 

executive and non-executive positions, the 

Chairman currently has no such commitments 

which the Board believes could conflict with 

his role and responsibilities in the Company. 

Board operation 

The number of meetings of the Board and 

Board committees during the year ended 

December and individual Directors’ 

attendance records are summarised on page . 

Board and committee papers are circulated 

in advance of meetings. All Board members 

have access to the Company Secretary and, 

where appropriate and necessary for the 

discharge of their Board and committee 

responsibilities, independent external advice 

at the Company’s expense. 

The Company Secretary acts as secretary to the 

Board and its committees and, in conjunction 

with the Head of Internal Audit, advises on 

governance matters. 

The Chairman ensures that input is sought and 

obtained from any Director who is unable to 

attend Board meetings and provides a verbal 

update following the meeting to complement 

the minutes. 

There is ongoing contact between the Chairman, 

Executive Directors and Non-Executive Directors 

between Board meetings.


Relations with shareholders 

The Company ensures that Board members, 

particularly the Non-Executive Directors, 

have a full understanding of the views of major 

shareholders. Investor feedback including 

analysts’ reports and significant changes to 

the shareholder register is reviewed at each 

Board meeting. 

The Chairman held meetings with a number 

of Promethean’s major shareholders during 

the year and the Chief Executive Officer and 

Chief Financial Officer meet regularly with 

investors and analysts. 

Board and committee effectiveness 

The Board recognises the benefits of robust 

appraisal of its own effectiveness and that 

of its committees and individual Directors. 

A questionnaire covering various aspects of 

performance, (as set out below), was used to 

evaluate performance during the year ended 

December : 

· creating effective Board and committee structures; 

· operating effectively as a Board or committee; 

· maintaining effectiveness; 

· the quality of the relationship between the 

Chairman and the Chief Executive Officer; 

· the degree of openness between the 

Chief Executive Officer and the Board; 

· the visibility of checks and balances within 

the executive team; and 

· whether the Non-Executive Directors are 

satisfied that all questions raised in Board 

and committee meetings have been 

adequately addressed. 

· Board responsibilities; 

· sub-committee responsibilities; and 

· individual Directors’ responsibilities. 

Individual Directors were required to assess their 

satisfaction with the operation of the Board and 

its committees and the effectiveness of these 

bodies in fulfilling the key responsibilities set out Training and development 

in their respective terms of reference. Directors’ 

views were collated by the Company Secretary 

and discussed by the Board. 

Overall, responses indicated a high degree of 

satisfaction with the working methods of the 

Board and committees. Board members agreed 

that the Board has sought to continuously 

improve the way it operates throughout the year. 

Lord Puttnam chaired a meeting of the 

Non-Executive Directors without the 

Chairman or Executive Directors present 

to discuss specific matters including: 

Number of meetings of the Board and Board committees during the year 

Director’s name Position and independence Board 

Graham Howe 

Independent Non-Executive Chairman of the Board 

Nomination Committee Chairman 

Remuneration Committee member 

Output from these meetings was fed back 

to the Chairman and the Board. 

The Company has in place a formal induction 

process for new Directors. 

The Board is provided with regular updates 

on areas such as regulatory developments by 

the Company Secretary and external parties 

including the Company’s auditor and other 

advisers as appropriate. 

Training and development needs are assessed 

as part of the evaluation of Board effectiveness 

outlined above. 

Directors’ attendance at meetings 

Audit 

Committee 

Remuneration 

Committee 

Nomination 

Committee 

8/8 — 8/8 1/1 

Jean-Yves Charlier Chief Executive Officer 8/8 — — — 

Neil Johnson Chief Financial Officer 8/8 — — — 

Lord Puttnam 

Senior Independent Non-Executive Director 

Audit Committee member 

Remuneration Committee member 

Nomination Committee member 

8/8 3/3 6/8 1/1 

Philip Rowley 

Dante Roscini 

Independent Non-Executive Director 

Audit Committee Chairman 

Nomination Committee member 

Independent Non-Executive Director 

Remuneration Committee Chairman 

Audit Committee member 

8/8 3/3 — 1/1 

7/8 3/3 8/8 — 

Tony Cann Non-Executive Director 8/8 — — — 



38 



Corporate Governance continued 

Audit Committee 

The Audit Committee is chaired by Philip Rowley, 

an independent Non-Executive Director who 

is considered by the Board to have recent 

and relevant financial experience. The other 

members are Lord Puttnam and Dante Roscini. 

The Audit Committee is charged by the Board 

with overseeing the Group’s financial reporting 

processes, the appointment, performance and 

remuneration of the Company’s auditor and the 

Group’s internal control and risk management 

arrangements. The Committee met three times 

during the year ended December . 

Key activities of the Audit Committee during 

included: 

· review of the Company’s and Group’s annual 

financial statements and interim reports prior 

to their approval by the Board; 

· consideration of reports on financial and 

operational internal controls prepared by the 

Company’s external and internal auditors; 

· review of the Group’s corporate governance 

and internal control arrangements; 

· monitoring of the external auditor’s 

independence, audit plans and performance 

and discussion of any matters arising from 

the auditor’s work; 

· making recommendations to the Board 

regarding the re-appointment of the 

Company’s auditor and proposed 

remuneration for audit services; and 

· approval and monitoring of the internal 

audit work programme for the year. 

Matters discussed and any observations or 

recommendations arising from Audit Committee 

meetings are reported to the Board by the 

Chairman of the Committee. 

The Head of Internal Audit reports formally to 

the Audit Committee twice a year. He has direct 

access to the Chairman of the Audit Committee 

without reference to executive management. The 

Chairman of the Audit Committee, who receives 

copies of all internal audit reports, also meets 

informally with the Head of Internal Audit 

between meetings of the Committee and 

with the external audit partner without the 

Executive Directors or the Head of Internal 

Audit in attendance. 

Appointment/re-appointment 

of external auditor 

The Audit Committee is responsible for ensuring 

that the independence of the Company’s auditor 

is not compromised or put at risk of compromise. 

The Company has in place a formal policy to 

safeguard the external auditor’s independence. 

Promethean does not, as a matter of policy, put 

the provision of external audit services out to 

tender on a regular basis. However, the Audit 

Committee reviews both the annual audit plan 

and output from the audit process as part of 

assessing the auditor’s expertise and performance. 

The Audit Committee also monitors the nature 

and extent of non-audit services provided by the 

auditor. Certain services are, as a matter of policy, 

excluded from being provided by the auditor 

on the basis that, in the Company’s view, they 

present an unacceptable risk to the auditor’s 

independence. Engagement of the auditor to 

perform non-audit assignments whose individual 

value exceeds a specific threshold requires 

the prior approval of the Chairman of the 

Audit Committee. 

Performance and independence of the auditor 

is formally reviewed by the Audit Committee 

as part of formulating its recommendation to 

the Board. A questionnaire-based evaluation 

process was developed during to support 

this review. 

The Audit Partner provides annually, on behalf 

of KPMG Audit Plc, a summary of the firm’s 

internal arrangements to ensure independence 

and its own assessment of its independence. 

The Board is satisfied that KPMG Audit Plc 

is independent. 

A summary analysis of remuneration 

paid to KPMG Audit Plc for audit and 

non-audit services during the year ended 

December appears in note of the 

Notes to the Financial Statements on page . 

Remuneration Committee 

The Remuneration Committee is chaired by 

Dante Roscini, an Independent Non-Executive 

Director. The other members are Graham Howe 

and Lord Puttnam. 

The Remuneration Committee is charged by the 

Board with overseeing executive remuneration 

policy and other performance-related pay and 

incentive schemes, approving contracts of 

employment with executives and ensuring that 

disclosures relating to remuneration in the 

Annual Report and Accounts comply with all 

relevant regulations. The Committee met eight 

times during the year ended December . 

Key activities of the Remuneration Committee, 

details of the Group’s remuneration policies and 

Directors’ emoluments and explanations of how 

the Code’s principles in this area are applied 

in practice are set out in the Directors’ 

Remuneration Report on pages to . 

Nomination Committee 

The Nomination Committee is chaired by 

Graham Howe, Chairman of the Board and an 

Independent Non-Executive Director. The other 

members are Lord Puttnam and Philip Rowley. 

The Nomination Committee is charged by the 

Board with overseeing the recruitment and 

induction process for new Board members and, 

following appointment, ensuring that individual 

members and the Board collectively provide 

an appropriate mix of knowledge, skills 

and experience. 

The Committee had no cause to meet to 

consider appointments to the Board, but met 

formally once during to review the terms 

of reference assigned to it by the Board. 

Committee members and all other members 

of the Board were also consulted in relation 

to a reassignment of SMT responsibilities in 

January as a consequence of the Group’s 

divisional reorganisation. 

Whilst no new appointments to the Board were 

made during the year ended December , 

the Board is mindful of gender and other 

diversity matters with regard to potential 

future appointments and is committed to 

rigorous and transparent selection procedures. 

Internal control 

The Board is ultimately responsible for the 

Group’s internal control arrangements, through 

which it guides and directs the activities of 

the Group to support delivery of its strategic, 

financial, operational and other objectives and 

safeguard shareholders’ investment and the 

Group’s assets. 

The Board recognises that a system of internal 

control reduces, but cannot eliminate, the 

likelihood and/or impact of poor judgement 

in decision-making, human error, deliberate 

circumvention of control processes by employees 

and others, management override of controls and 

the occurrence of unforeseeable circumstances.


The Board sets policies and seeks and obtains, 

both directly and through the Audit Committee, 

assurance regarding the existence and operation 

of appropriate internal controls to mitigate key 

strategic, financial, operational, compliance 

and reputation risks. The Board and Audit 

Committee consider any significant control 

matters raised in reports from management, 

the Company’s external auditor and the 

internal audit team and monitor the progress 

of remedial actions. 

The key components of the Group’s overall 

control framework, all of which were in place 

throughout the year ended December 

and up to the date of approval of this report, 

are set out below. The Board is satisfied that 

these arrangements are consistent with the 

Revised Guidance for Directors on the 

Combined Code (the Turnbull Guidance), 

as published by the Financial Reporting Council. 

Financial planning and monitoring 

Promethean sets annual budgets incorporating 

three-year projections, which are subject to 

Board approval. 

The monthly reporting process is supplemented 

by a cycle of quarterly reviews that incorporate 

in-depth re-forecasting of expected financial 

performance for the remainder of the current 

financial year and the following two years. 

The Board reviews business performance when it 

meets. High level summary financial information 

including actual and expected performance and 

prior year comparatives is provided to all Board 

members on a monthly basis. 

Policies, procedures and authorisation limits 

The Group has in place defined policies and 

procedures covering its key activities and 

delegated authorisation limits based on business 

need. These policies are available to employees 

through the Group’s intranet. The Group has 

purchased, and is in the process of rolling out, 

a policy management software package that 

will improve communication of key policies 

and provide an electronic record of individual 

employee’s understanding and acceptance 

of certain key policies. 

Segregation of duties, authorisation limits 

and other controls are designed into both 

system-based and manual processes. These 

arrangements are reviewed periodically by 

management and the internal audit team 

to ensure they remain appropriate. 

Risk assessment and management 

A structured risk assessment process, facilitated 

by the internal audit team, has been in place since 

early and was further developed during 

the year ended December . 

The process seeks input from the SMT in order 

to develop a comprehensive view of the key risks 

to which the Group is potentially exposed. 

The SMT’s view of risk is mapped against the 

Board’s risk appetite, expressed in terms of five 

measures including predictability of financial 

performance, product and operational safety 

performance and customer satisfaction. 

Responsibility for development and delivery 

of mitigating actions in areas where exposure 

is seen to exceed the Board’s risk appetite is 

assigned to specific members of the executive 

management team. 

Periodic updates on the status of agreed 

risk management actions are provided 

to the Audit Committee. 

Internal Audit 

Promethean maintains an in-house internal audit 

function, supplemented as and when required 

via a flexible resourcing agreement with 

PricewaterhouseCoopers LLP. 

Internal Audit’s primary role is to provide the 

Board and senior management with objective and 

independent assurance regarding the Group’s 

internal control environment. A programme of 

work covering a combination of key risks and 

core business processes is defined annually 

and approved by the Audit Committee. 

Letters of representation 

Members of the SMT and other key managers 

across the business are required to submit annual 

letters of representation covering a range of 

matters including compliance with key policies, 

risk management and internal control matters 

and related-party transactions. 

Effectiveness of internal 

control arrangements 

A level of ongoing review is in place as the Board 

and Audit Committee consider business tabled 

at meetings throughout the year. However, the 

Audit Committee carries out, on behalf of the 

Board, a formal annual review of the Group’s 

internal control arrangements. 

Key components of this review include 

consideration of the following: 

· benchmarking assessment of the Group’s 

internal control environment against a 

recognised standard (the COSO ERM 

model), compiled by Internal Audit; 

· the Group’s whistle-blowing arrangements 

and matters raised through this process; 

· reports from the Group’s external and 

internal auditors; 

· updates on the status of issues raised 

in internal audit reports; 

· management representations; and 

· mapping of assessment questions proposed 

in the Appendix to the Turnbull Guidance 

against key control processes in place. 

The Board is satisfied that appropriate actions 

have been, or are being, taken to remedy any 

significant weaknesses or failures identified 

as a result of this or other review processes. 


40 



Directors’ Remuneration Report 

The Directors present their Remuneration Report to shareholders in respect 

of the year ended December . 

Introduction 

This report has been prepared in accordance 

with Schedule (Quoted Companies: 

Directors’ Remuneration Report) of the Large 

and Medium-sized Companies and Groups 

(Accounts and Reports) Regulations . 

It also complies with the UKLA Listing Rules 

and describes the Company’s remuneration 

policy, which is consistent with the relevant 

provisions of the UK Corporate Governance 

Code (‘the Code’). A resolution to approve 

this report will be proposed at the AGM 

of the Company on April . 

The Remuneration Committee remit 

and membership 

The members of the Remuneration Committee 

(‘the Committee’) during the year were 

Dante Roscini (Chairman), Graham Howe 

and Lord Puttnam. All members of the 

Committee are considered by the Company 

to be independent. 

The Committee’s remit covers remuneration 

policy, the broad compensation framework 

and the specific remuneration packages of the 

Executive Directors, the Senior Management Team 

(SMT) and the Company Secretary. The full 

remit can be found in the Committee’s terms of 

reference available under the corporate governance 

heading of the investors’ section at the Company’s 

website www.prometheanworld.com. 

In light of the substantial changes in the 

Company’s markets towards the end of , 

the Committee determined that a review of 

the Company’s remuneration effectiveness and 

strategy was required in respect of the Executive 

Directors and SMT. The Committee appointed 

PricewaterhouseCoopers LLP (PwC) in 

February to carry out this review and 

subsequently to act as external advisers on 

executive remuneration to the Committee. 

PwC also provides other tax and human resource 

consulting services to the Company but the 

nature of these services is not considered to 

conflict with their role as external adviser 

to the Committee. 

Additional services to the Committee were 

provided by Freshfields Bruckhaus Deringer LLP 

(‘Freshfields’) in respect of legal and corporate 

governance advice and Mercer Limited in 

respect of executive remuneration benchmarking. 

The Committee initiates any appointment of 

external advisers to the Committee and makes 

the final decision on which advisers are appointed. 

The Chief Executive Officer and the Chief 

Human Capital Officer are invited to attend 

for part of Committee meetings. The Company 

Secretary acts as secretary to the Committee. 

No Director or employee participated in any 

decision on his or her own remuneration. 

Summary of Committee activity 

The Committee met eight times during the 

year and the attendance record is set out in 

the Corporate Governance Report on page . 

Additionally members of the Committee spent 

substantial time during the year outside of 

formal meetings in connection with the review 

of executive remuneration and on Group 

incentive arrangements. 

In addition to its regular work, the key areas 

of activity for the Committee during the year 

were: the review of proposals in respect of the 

executive remuneration and share plans; review 

and consultation with shareholders on key 

principles; agreement of updated remuneration 

arrangements post-consultation and grant of 

share awards following adoption of new and 

amended share plans; and agreement of the 

detailed arrangements in respect of the 

CEO’s relocation. 

Remuneration policy 

The Company’s executive remuneration 

policy is designed to recruit, motivate and retain 

highly skilled employees in the very competitive 

technology sector. The policy aligns their 

objectives and incentives with the interests 

of shareholders while operating in accordance 

with applicable best practice principles and 

taking account of relevant codes of practice. 

The policy is designed to ensure that 

remuneration packages reward, in a fair and 

responsible manner, individuals’ contribution 

to the Company’s performance as a leader in the 

global interactive learning technology market, 

and avoid rewarding failure and unsatisfactory 

performance. In this respect, the Committee is 

mindful of environmental, social and governance 

concerns and seeks to ensure that remuneration 

arrangements do not encourage inappropriate 

behaviour. Clawback and deferral provisions 

feature in the Company’s long-term incentive 

arrangements designed to manage risk and 

encourage sustainable performance. 

The Committee seeks the advice and guidance 

of external advisers in setting the remuneration 

framework. The Committee takes account of the 

Company’s performance, competence and talent 

and leadership frameworks that are deployed 

across the organisation, plus the type of role, 

market data and the existing share and share 

option holdings of individuals. In this way, 

the Committee takes into account pay and 

conditions of other employees of the Group 

when considering the remuneration packages 

of the Executive Directors. 

Once the Committee has determined the 

remuneration framework and levels for Executive 

Directors and the SMT, it empowers senior 

management to cascade and deploy this 

framework as appropriate throughout the 

organisation, taking account of the relevant 

geographic recruitment market and local 

employment market norms. 

When reviewing and determining Executive 

Directors’ salary levels, the Committee has 

regard to the rates for similar roles in UK listed 

companies of comparable size, with a particular 

emphasis on the technology sector, and with 

due reference, where possible and appropriate, 

to direct commercial competitors. Base salary 

is targeted to be at a median level against 

a relevant comparator group with upper 

quartile levels of total pay only for exceptional 

performance. The Committee is, however, 

mindful to avoid the automatic ratcheting effect 

of following median or upper quartile figures


generated from benchmarking analyses against 

comparator companies. 

Non-Executive Directors’ remuneration was 

benchmarked in early on the same basis 

as that of the Executive Directors and aligned 

with good market practice. 

It is also policy to provide for a significant 

proportion of the total remuneration package 

of the Executive Directors and SMT to be 

linked to performance related pay and incentives, 

such that the majority of the overall potential 

remuneration package of senior management 

is subject to challenging performance targets. 

This policy reflects the Company’s objectives 

and is designed to motivate executives and 

employees to focus on both annual and 

longer-term performance. 

The application of this policy formed a key part 

of the executive remuneration review in , 

as the absence of any long-term incentive awards 

since IPO combined with the effect of post-IPO 

share price movements had the effect that the 

remuneration structures at the start of had 

insufficient long-term focus. 

To further encourage the long-term focus, the 

Board determined during the year that it was 

appropriate to adopt a minimum shareholding 

policy for Directors and SMT. The minimum 

level of share ownership required is % 

of base salary (or % of fees in the case 

of Non-Executive Directors). Further detail 

is provided on page of this report. 

The Committee reviewed the remuneration 

policy during the year with input from 

PwC as its external advisers. Other than the 

adoption of a minimum shareholding policy, 

the Committee was satisfied that no changes 

were necessary and that the Board remuneration 

policy remains appropriate. However, the 

application of this policy has resulted in the 

introduction of an element of deferral into shares 

for the annual bonus and the adoption of a new 

long-term incentive plan, as set out below. 

The relationship between fixed and performance 

related pay for target and maximum performance 

for the CFO is set out in the charts below. 

Given the individual arrangements in respect 

of Mr Charlier’s long-term incentives, the 

illustration does not at present reflect the 

long-term elements of his own remuneration 

package, although it is intended that in principle 

the same overall policy will be applied. 

Components of remuneration 

The remuneration of the Executive Directors 

comprises: base salary; benefits; pension; 

annual performance bonus; and long-term 

incentive awards. 

Balance of Fixed and Variable remuneration on an expected value basis 

On-target performance 

10% 

1% 

Maximum performance 

9% 

21% 

Base salary 

The Committee determines base salaries according 

to individual contributions and performance. 

As part of the executive remuneration review, 

an increase to Neil Johnson’s annual salary was 

agreed, which increases this to £,. This 

is the first increase awarded to Mr Johnson since 

the IPO on March and was considered 

by the Committee to be appropriate to 

recognise his ongoing contribution, his increasing 

experience as CFO of a listed company and in 

line with the Company’s remuneration policy. 

At the request of the CEO, his own pay 

arrangements did not form part of the 

remuneration review. However, in connection 

with his relocation to the US in early , 

his base pay was reset, based on the exchange 

rate at that time, from £, to $,. 

Certain other changes were made to his 

remuneration package in connection with 

his relocation as set out below, which in broad 

terms were intended to match his previous 

terms and conditions as adapted to the 

different pay structures applicable in the US. 


40% 

40% 

33% 

2% 

3% 

Salary 

Benefits 

Pension 

Bonus 

PSP 

Value Builder Award (CSOP) 

5% 

4% 

32%

42 



Directors’ Remuneration Report continued 

Components of remuneration continued 

Benefits 

Executive Directors receive other benefits 

comprising medical, travel, life assurance cover 

and a contribution towards the cost of tax 

and legal fees. Jean-Yves Charlier also receives 

permanent health insurance and Neil Johnson 

also receives an annual car allowance. 

In connection with the CEO’s relocation to the 

US, he receives a housing allowance of $, 

per month and certain travel costs in respect 

of him and his family. 

Pension 

Neil Johnson receives a contribution of .% 

(: %) of his base salary to a personal 

pension scheme. The increased percentage 

formed part of the overall review of his 

remuneration and is considered to bring the 

level of contributions more closely in line with 

market practice. 

Jean-Yves Charlier’s relocation to the US affects 

his ability to contribute to tax-efficient pension 

arrangements and therefore the Company now 

pays him a pension supplement in lieu of making 

contributions on his behalf. The amount paid has 

been augmented to ensure that the Company 

meets its contractual obligations to provide him 

with comparable pension benefit funding to that 

which he would have received if he had remained 

in the UK, based on the .% contribution level 

that was agreed for Executive Directors. 

Annual performance bonus 

Satisfaction of stretching on-target performance 

conditions delivers a bonus of % of base 

salary. No bonus is payable where performance 

in respect of financial and market share targets 

is below a threshold level. The Committee has 

discretion to reduce bonus payments where 

it considers that the overall performance of the 

business does not justify the calculated level of 

payment. For exceptional performance above 

target level, bonus payments may be payable 

up to a maximum of % of salary. The level 

at which maximum bonus arises is set each year 

to ensure that the performance level is sufficiently 

stretching to justify the level of bonus payable. 

The performance measures applied to the annual 

bonus and their weighting together with actual 

performance against the targets is set out 

in the table below. 

Appropriate personal objectives are agreed 

with the Committee. 

Financial targets are assessed based on audited 

results. The market share target is market share 

growth in the K– (excluding China) sector 

of each of Interactive Whiteboards and Learner 

Response Systems, as reported by Futuresource 

Consulting Limited. The achievement of any 

subjective element of personal objectives is 

determined by the Committee, taking into 

account specific targets and overall performance. 

Bonus payment 

Prior to bonuses were paid quarterly based 

on quarterly performance targets and cumulative 

annual targets. For , Neil Johnson moved 

to a half yearly bonus structure, with an initial 

mid-year payment based on six months’ 

performance against financial targets with 

a cumulative calculation performed after the 

end of the year. Jean-Yves Charlier moved to 

an annual bonus payment based on full year 

performance. From , both Executive 

Directors will receive annual bonus payments 

only after the financial year end once the 

Company’s audited results are confirmed. 

Bonus deferral 

The Committee has determined that % of 

any bonus payable to Executive Directors, and 

normally the SMT, which takes total cash bonus 

for above total target cash bonus 

should be taken in shares as either a deferred 

bonus award (deferred for a period of up to 

two years and subject to forfeiture for bad 

leavers with dividends payable at the discretion 

of the Committee) or compulsory share purchase 

from incremental net pay. This applies to 

bonus payments and any future bonus payments 

although no deferral under the policy arises in 

respect of bonus. 

Long Term Incentive Plans (LTIPs) 

The Company currently operates two long-term 

incentive plans: the Promethean Company Share 

Option Plan (‘the PRW CSOP’), which 

was adopted at IPO, and the Promethean 

Performance Share Plan (‘the PRW PSP’), 

which was adopted by shareholders at the 

General Meeting on July . Under 

both of these plans, all employees (including 

Executive Directors) of the Group are eligible to 

participate at the discretion of the Committee. 

Both Executive Directors hold a number 

of unvested shares under awards made 

prior to IPO on March . 

Details of these long-term incentive arrangements 

are set out below. Achievement of targets under 

the long-term incentive arrangements detailed 

below will be determined or reviewed by the 

Company’s external advisers or based on audited 

financial information. 

Performance measures applied to annual bonus and their weighting and performance against targets 

Performance measure 

% 

of total 

on target 

bonus 

% 

achievement 

of target 

Jean-Yves 

Charlier 

actual bonus 

(% of 

on target 

bonus) 

Neil 

Johnson 

actual bonus 

(% of 

on target 

bonus) 

Financial targets 75% 97.7% 73.3% 73.3% 

Non financial targets 25% 19.2% 19.2% 

Total 100% 92.5% 92.5% 

. Financial targets for the year for on target performance: Revenue of £m, Gross Profit of £.m and Adjusted EBIT of £.m. 

. The non financial targets consist of personal objectives and market share measures.


PRW PSP 

Following a detailed review of the Company’s 

long-term incentive arrangements in , the 

Committee concluded that a new long-term 

incentive plan was needed to give the Company 

the flexibility to reward strong long-term 

performance, particularly taking account of the 

difficulties in delivering value via market-priced 

options in the current challenging equity 

market conditions. 

The Committee consulted with major shareholders 

on the principal terms of the PRW PSP and the 

plan was approved by shareholders at a General 

Meeting on July . 

It is intended that the PRW PSP will be 

the primary long-term incentive plan operated 

by the Company. 

The plan provides for the grant of options or 

share awards, normally at nil cost. The maximum 

annual award under the PRW PSP (together 

with the PRW CSOP) is % of base salary 

although it is not expected that awards will 

exceed % of base salary apart from in 

exceptional circumstances. Awards to Executive 

Directors, and normally to other members of 

the SMT, will be subject to the achievement of 

appropriate performance conditions and will 

normally vest three years after the date of award, 

subject to the satisfaction of those conditions 

and continued service. 

No award was made to Jean-Yves Charlier under 

the PRW PSP in as the awards in which 

he invested prior to IPO were considered to 

provide sufficient incentive and alignment 

with shareholders. 

In accordance with the principles outlined 

to shareholders in the July General Meeting 

circular, an award of , shares, equivalent 

to approximately % of base salary, was made 

to Neil Johnson on July . 

In light of the challenging market conditions 

affecting the Company, the Committee 

determined that it was appropriate to set three 

annual performance targets for the PRW PSP 

rather than a conventional three-year measure. 

Stretching earnings based targets will be set 

around the start of each financial year (or in 

respect of the first tranche of the awards, 

at the date of grant) and will be disclosed in the 

Directors’ Remuneration Report at the end of 

each performance year. The Committee will keep 

the target setting process under review and intends 

to apply more conventional long-term performance 

targets as soon as this is considered appropriate in 

the future. The nature of the performance targets 

and vesting of PRW PSP awards formed a key part 

of the consultation with major shareholders prior 

to adoption of the PRW PSP and shareholders 

were generally supportive of the arrangements, 

although the intention to move to more 

conventional three-year targets was welcomed. 

The provisional level of vesting of each one-third 

tranche of the award will be determined after 

the end of each financial year of the three-year 

performance period. However, to reflect the need 

to sustain performance over the full three-year 

period, a cumulative test will be applied at the 

end of the performance period and if cumulative 

threshold levels are not met, % of the award 

which has provisionally vested based on annual 

performance will be clawed back. Conversely, 

if the cumulative vesting targets are met in full, 

any previously unvested part of the award will 

vest. As noted above, awards will ordinarily only 

be released after three years. 

For the financial year ended December , 

the performance target applicable to the 

provisional vesting of the first one-third tranche 

of the award and related vesting levels 

are as follows: 

· Adjusted Basic Earnings per Share (ABEPS) 

is .p – % vesting; and 

· ABEPS is at least .p – % vesting. 

Vesting between these two targets is on 

a straight-line basis. 

Based on ABEPS of .p, the provisional 

level of vesting for Neil Johnson for is % 

or , shares. Half of this is subject to 

potential forfeiture if cumulative threshold 

vesting targets are not met for the three-year 

period to December . 

The basis for choosing ABEPS as the 

appropriate performance measure is that it 

provides a measure that is of direct relevance 

to the award holders and, in combination with 

the Value Builder Award under the PRW CSOP, 

it provides a balance between operational and 

market-based performance conditions. 

The Committee reserves the right to make 

future awards at its discretion. 

PRW CSOP 

The PRW CSOP provides for the grant 

of options to eligible employees (including 

Executive Directors) with an exercise price 

not less than the market value of a share on 

the date of grant. 

Following shareholder approval at the General 

Meeting on July , changes were made 

to the rules of the PRW CSOP. As a result, the 

previous individual limit of % of base salary 

under the PRW CSOP has been amended to 

a combined maximum annual award limit under 

the PRW CSOP and the PRW PSP of % 

of base salary, although it is not expected that 

awards will exceed % of base salary apart 

from in exceptional circumstances. 

Awards to Executive Directors, and normally 

to other members of the SMT, will be subject 

to the achievement of appropriate performance 

conditions and will ordinarily vest no earlier than 

three years from grant. 

No options were granted to Jean-Yves Charlier 

under the PRW CSOP in as the awards in 

which he invested prior to IPO were considered 

to provide sufficient incentive and alignment 

with shareholders. 

In accordance with the principles outlined 

to shareholders in the July General Meeting 

circular, an option over , shares, worth 

approximately % of base salary, was granted 

to Neil Johnson on July , with an exercise 

price of .p. This is intended to be a one-off 

award, referred to as the Value Builder Award, 

made subject to very stretching performance 

conditions based on share price growth over 

a five-year period and vesting in full only if the 

share price reaches at least p. Vesting is 

as follows: 

· % of the option will vest if the average share 

price of the Company for the consecutive 

-day period ending on July is 

at least .p, being % growth from 

the date of grant; and 

· % of the option will vest if the average 

share price of the Company for the consecutive 

-day period ending on July is 

at least p. 

Vesting between these two targets will 

be on a straight-line basis. 

Additionally, the option may vest in full on 

the third anniversary of grant for exceptional 

achievement if the average share price of the 

Company for the consecutive -day period 

ending on July is at least p. 

The basis for choosing share price as the 

appropriate performance measure is that it is 

highly aligned with shareholders and the specific 

terms of the Value Builder Award reflect the key 

objective of the Executive Directors to deliver 

shareholder value. In combination with the 


44 




PRW CSOP continued 

awards under the PRW PSP, it provides 

a balance between operational and 

market-based performance conditions. 

It is not intended that options will be granted 

annually under the PRW CSOP to Executive 

Directors or members of the SMT. The 

Committee reserves the right to make awards 

at its discretion but it is intended that in the 

future the PRW CSOP will be used, where 

appropriate, primarily as a recruitment tool 

for making awards to new joiners. 

Share awards made prior to IPO 

The share awards held by the Executive 

Directors have been disclosed in previous 

reports and the summary below therefore 

provides details on changes during . 

Jean-Yves Charlier share awards 

Restricted Share Award (RSA) 

At January , Jean-Yves Charlier held 

, unvested shares subject to the RSA 

(under which shares were subject to forfeiture 

in the event that Mr Charlier left employment 

before the shares vested). As considered 

appropriate in the context of the business 

at the time the award was made, no other 

performance conditions applied. 

As noted in last year’s Directors’ Remuneration 

Report, the Committee agreed that, in connection 

with Mr Charlier’s relocation to the US, 

the unvested balance of RSA shares as at 

February should immediately vest in 

full such that additional tax charges were not 

incurred on vesting. Mr Charlier has met his 

commitment to retain these shares at least until 

their normal vesting date of September . 

Charlier Conditional Share Award (CCSA) 

Under the CCSA, ,, shares (as restated 

post-IPO reorganisation) were acquired from 

certain of the Cann family trusts by Mrs Alexandra 

Charlier, wife of the CEO. The conditions on 

which these shares were acquired were agreed 

between Jean-Yves Charlier and the trustees and 

these give the right for the trustees to repurchase 

the shares for their original purchase price of .p 

(or market value if lower) if the performance 

conditions are not met or if Mr Charlier’s 

employment ceases prior to vesting. 

The award will vest in three equal tranches 

in March , March and March 

subject to meeting target levels of growth of 

total shareholder return (TSR) of the Company 

over the year up to the relevant vesting date. 

All relevant shares in a tranche will vest if annual 

TSR growth is at least % in the relevant year, 

with no vesting if the annual TSR growth is less 

than %, and vesting on a straight-line basis 

between those points. The TSR base level is 

reset at the start of each relevant year in order 

to measure TSR for the forthcoming year. At the 

end of the third year, any unvested tranches may 

vest on a straight-line basis if aggregate TSR 

performance over the three-year period to 

March demonstrates an overall growth 

of between .% and .%. In the case of 

a corporate event, all of the tranches will vest 

in full provided that the share price at that time 

is at least equal to p. If the share price is less 

than p at the relevant date, no further shares 

will vest. 

No vesting occurred at March . 

The base point from which the TSR target for 

the year to March starts is .p and 

therefore taking account of dividends payable 

the share price for target vesting measured 

to March will be .p and the 

share price for threshold vesting measured 

to March will be .p. 

At the time of the shareholder consultation 

process during , shareholders were informed 

that possible changes to the vesting conditions 

applying to the CCSA were being considered 

by the trustees of the Cann family trusts. The 

specific terms for this have now been agreed in 

principle between the parties and it is intended 

that the documentation will be finalised in 

March , at which point the terms will 

be confirmed in a shareholder announcement. 

The proposed changes will have the effect that 

the base point from which the TSR target for 

the year to March is measured will 

be the higher of the share price measured to 

March or the share price that would 

have given full vesting of the second tranche 

at March . 

In addition, the test in respect of any unvested 

shares at the end of the performance period 

would be replaced by a share price target 

measured to March , being a minimum 

of £ before any vesting of these shares occurs, 

and a target of £ for the shares to vest in full 

(with pro rata vesting between these prices). 

This is one year longer than the existing award 

period and provides an extended retention and 

incentive period, at the same time bringing the 

terms of this vesting more closely into line with 

the Value Builder Awards granted to the CFO 

and SMT in . This has no cash cost to the 

Company or dilution effect for shareholders 

although it is expected that a small accounting 

charge will arise. 

Neil Johnson share awards 

Performance Share Award (PSA) 

Neil Johnson holds two PSAs (PSA and 

PSA ) which were granted pre-IPO and 

subject to performance targets set in the 

context of the business at that time. 

PSA 

As at January , the unvested PSA 

comprised , Base Shares and , 

Superior Shares, subject to Adjusted EBITDA 

performance targets. The Base Shares potentially 

vest in two equal tranches on April and 

April subject to annual EBITDA targets 

up to the previous December. % of the 

Base Shares in each tranche vest for achievement 

of threshold performance with full vesting 

for achievement of target performance and 

straight-line vesting between these points. For 

any Base Shares in the first tranche that did not 

vest in April , % of the balance may vest 

where the performance across the two years to 

December meets the threshold cumulative 

EBITDA target for the period, with full vesting 

if the full cumulative EBITDA target is met. 

Straight-line vesting occurs between these two 

points. The Superior Shares may vest to the 

extent that the cumulative EBITDA across 

the three-year period exceeds the full target 

EBITDA by between % and %. 

As disclosed in the Directors’ Remuneration 

Report, the EBITDA threshold target for the 

tranche of Base Shares potentially vesting in 

April was not met and therefore no vesting 

occurred at that time. The cumulative target 

EBITDA for the two years to December 

was £m, which will enable , shares, 

being .% of those shares, to vest at 

April . 

The target EBITDA for the year to 

December was £m, on that basis 

, shares, being .% of the relevant shares, 

will vest on April . The Superior Shares 

do not vest.


Taking account of the above in total , 

shares (Base and Superior) will remain unvested 

and subject to the right of the Company to 

repurchase these shares at any time before 

April at their original purchase price 

of .p per share (or market value at the time, 

if lower). 

PSA 

As at January , the unvested PSA 

comprised , Base Shares and , 

Superior Shares, subject to Adjusted EBITDA 

performance targets. 

The Base and Superior Shares will vest on 

April subject to the achievement of 

a cumulative EBITDA target measured over 

the three-year period to December , 

the target for which will be set no later than 

June . % of the Base Shares will vest 

for achieving threshold performance with full 

vesting for the achievement of target performance. 

The Superior Shares will vest to the extent that 

the cumulative EBITDA performance across the 

three-year period exceeds the full target EBITDA 

by between % and %. To the extent these 

shares do not vest, they will be subject to the right 

of the Company to repurchase the shares at any 

time before April on the basis set out 

above for the PSA. 

All-employee share plans 

Shareholder approval was given at the General 

Meeting on July for the Promethean 

SAYE Share Option Plan and the 

Promethean Share Incentive Plan . The 

Committee proposes to review the timing for 

implementation of these plans during . 

Executive Directors’ service contracts 

Both Executive Directors have a service contract 

with the Company that provides for a minimum 

period of notice of nine months by the individual 

and twelve months by the Company. The Company 

has the ability to terminate each Executive Director’s 

service contract by the payment of a cash lump 

sum in lieu of notice equal to the salary and other 

contractual benefits, excluding bonus payable, 

for the unexpired term of the notice period. 

In the event of termination of Jean-Yves Charlier’s 

employment (other than summary termination, 

in which case no bonus is payable, or termination 

on the grounds of ill health, in which case a 

bonus is payable at the Committee’s discretion), 

he is entitled to receive a bonus payment for the 

year in which termination occurs that is time 

pro-rated to the termination date. 

Executive Directors’ 

external appointments 

The Committee recognises that in certain 

circumstances taking on other directorships will 

broaden the experience of an Executive Director. 

Therefore, in accordance with the Code, the 

Committee’s policy is that Executive Directors 

may, by agreement with the Board, serve as 

non-executive directors of other companies. 

The Director may retain fees received in respect 

of these appointments. 

Jean-Yves Charlier served as a Non-Executive 

Director and member of the Supervisory Board 

and the Strategic Committee and Audit 

Committee of Vivendi SA. 

Chairman and Non-Executive 

Directors’ remuneration 

The Chairman’s fee is determined by the 

Committee acting in the absence of the 

Chairman. Non-Executive Directors' fees are 

determined by the Board. The current level 

of fees was set at IPO in March and is 

expected to be reviewed in . Fees are 

determined according to time commitment, scale 

of roles and the level of fees paid in comparable 

companies. Non-Executive Directors are not 

entitled to participate in the Company’s share, 

bonus or pension schemes. 

The Chairman’s annual fee is £,. He is also 

provided with medical insurance and with such 

secretarial and other resources as are reasonably 

necessary for the performance of his duties 

as Chairman. 

Lord Puttnam, Philip Rowley, Dante Roscini and 

Tony Cann are each entitled to receive an annual 

fee of £,. In addition to his annual fee, 

Lord Puttnam is entitled to an additional fee 

of £, as Senior Independent Director 

and £, for his membership of the Audit 

Committee. Philip Rowley is entitled to an 

additional fee of £, as Chairman of the 

Audit Committee and Dante Roscini is entitled 

to an additional fee of £, as Chairman of the 

Remuneration Committee. If a Non-Executive 

Director is a member and/or Chairman of more 

than one Board committee, he is entitled to 

only one additional fee which will be the higher 

of the relevant fees that would otherwise be 

payable to him. The annual fees of Lord Puttnam, 

Philip Rowley and Dante Roscini may be reduced 

by £, for each Board meeting that the 

Director does not attend, although account 

will also be taken of the Director’s time spent 

outside meetings on the Company’s business. 

Chairman and Non-Executive Directors 

The Chairman and each of the Non-Executive 

Directors have letters of appointment. The 

Chairman’s appointment is terminable by either 

party giving three months’ written notice or 

Share ownership policy 

at any time in accordance with the Articles or the 

Companies Act . The appointments of the 

other Non-Executive Directors are for a fixed term 

of three years, commencing on March , 

the date of IPO, but subject to annual re-election 

as noted below. They may also be removed in 

accordance with the Articles or the Companies 

Act . Those Non-Executive Directors are 

not entitled to receive any compensation on 

termination of appointment. 

The Board decided prior to its first AGM as a 

listed company in April that all Directors, 

in accordance with emerging best practice, 

will stand for re-election each year. All Directors 

stood for re-election at the AGM. 

As noted on page of this report, the 

Committee adopted a minimum shareholding 

policy during . All Directors (including 

Non-Executive Directors) and members of 

the SMT will be expected to hold shares in the 

Company with a value of at least % of their 

base salary (or annual fee). The Committee has 

set a five-year qualifying period (three years for 

Non-Executive Directors) within which the 

requirement must be met. 

Executive Directors and SMT members are 

expected to retain at least % of the shares 

they acquire through vested share awards 

(net of tax and acquisition costs) until such 

time as they meet the requirement. 

Shares comprised in a vested but unexercised 

share award will ordinarily count towards the 

required level, as will shares held by connected 

parties such as spouses or minor children. 

The Committee will review Directors’ and 

SMT shareholdings annually in the context 

of this policy. 

As at December , all Directors met the 

minimum shareholding requirement. 


46 




Audited information 

Directors’ emoluments and pension entitlements are set out in the table below 

Directors’ emoluments and pension entitlements 

Salary/fees 

£ 

Bonus 

£ 

Benefits/ 

allowances , 

£ 

Relocation 

£ 

Pension , 

£ 

Total 


£000 

Total 

 

£ 

Graham Howe 105 — 1 — — 106 84 

Jean-Yves Charlier 367 333 122 342 40 1,204 573 

Neil Johnson 196 185 21 — 22 424 459 

Lord Puttnam 48 — — — — 48 38 

Tony Cann 35 — — — — 35 28 

Philip Rowley 45 — — — — 45 36 

Dante Roscini 43 — — — — 43 34 

839 518 144 342 62 1,905 1,252 

. Benefits comprise medical, travel and permanent health insurance, life assurance cover and a contribution towards the cost of tax and legal fees. Following his relocation, 

Jean-Yves Charlier is entitled to certain travel costs for himself and his family. 

. Neil Johnson receives an annual car allowance. Following his relocation, Jean-Yves Charlier receives a housing allowance of $, per annum. 

. Relocation costs relate to the relocation of the CEO to the US during including grossed up amounts for costs treated as benefits for tax purposes. 

. Neil Johnson’s contribution was made to a personal pension plan. 

. Jean-Yves Charlier's amount includes amounts paid to ensure that the Company provides pension benefit funding equivalent to that which he would have received 

if he had remained in the UK. 

. For period from March to December . 

. Following Jean-Yves Charlier's relocation emoluments are paid in USD and are translated in the above table at the prevailing monthly exchange rate. 

In addition to the above, the share-based payment charge for Neil Johnson is £, (: £nil). There are no share-based payment charges relating 

to other Directors (: £nil). 

Directors’ share interests 

The beneficial interests (whether held directly or indirectly) of Directors holding office at the end of the year in the shares of the Company 

at December are set out in the table below. 

Directors’ share interests 

Shareholding 

at 31 December 2011 

Share awards 


Total shareholding 


Total shareholding 

at January 

Graham Howe 10,891,162 — 10,891,162 11,041,162 

Jean-Yves Charlier 3,806,873 1,905,380 5,712,253 5,591,514 

Neil Johnson 415,363 206,099 621,462 595,192 

Lord Puttnam 250,000 — 250,000 190,537 

Tony Cann 66,081,002 — 66,081,002 79,287,412 

Philip Rowley 132,768 — 132,768 132,768 

Dante Roscini 120,268 — 120,268 120,268 

. Shares categorised as “share awards” relate to shareholdings that have not yet vested and are therefore subject to a clawback option under the CCSA, PSA 

and PSA . 

There have been no changes in Directors' share interests in the period from December to February .


Audited information continued 

Directors’ interests in share awards 

As at January and December , the Directors held the following forfeitable interests in ordinary shares under the Restricted Share Award 

(RSA), Charlier Conditional Share Award (CCSA), the Performance Share Award (PSA ) and the Performance Share Award 

(PSA ). The shares are subject to vesting conditions. 

Directors’ interests in share awards 

At 

January 

Granted Lapsed Vested 

At 

31 December 


Award price 

per share 

(pence) 


RSA 814,355 — — (814,355) — See details on page 44 

CCSA 1,905,380 — — — 1,905,380 5.25p 3 years to 17 March 2013 

Neil Johnson 

PSA 85,584 — — — 85,584 5.25p 3 years to 30 April 2012 

PSA 120,515 — — — 120,515 5.25p 3 years to 30 April 2013 

. These awards will vest over a three-year period from IPO ( March ) subject to meeting target levels of growth in total shareholder return (TSR) of the Company. 

Shares potentially vest in three equal tranches in March , and . All relevant shares in a tranche will vest in full if annual TSR growth is at least % in the 

relevant performance year with no vesting if TSR growth is less than %. The TSR base level is reset at the beginning of each performance year in order to measure TSR 

performance for that year. At the end of the third year, any unvested tranches may vest on a straight-line basis if aggregate TSR performance over the three-year period to 

March demonstrates an overall growth of between .% and .%. In the case of a corporate event, all the tranches of shares will vest in full provided that the 

share price at that time is at least equal to £. (the IPO offer price). If the share price is less than £. at the date of the corporate event, no further shares will vest. 

No shares vested as at March . The threshold share price at which vesting may occur as at March is .p and full vesting will occur if the share price 

measured at that date is .p. As set out on page , certain amendments are proposed to be made to these targets, which affect the terms on which the third tranche 

may vest and the retest for any unvested shares. 

. Comprises , Shares subject to Adjusted EBITDA performance targets. Further detail on the performance targets is set out on page of this report. The threshold target 

for the tranche of Shares potentially vesting in April was not met and therefore no vesting occurred at that time. Overall, based on performance to December , 

, Shares are able potentially to vest at April . No further performance target applies to these shares. 

Overall , Shares are no longer capable of vesting. These shares will be subject to the right of the Company to repurchase these shares at any time before 

April at their original purchase price of .p per share (or market value at the time, if lower). 

. Subject to cumulative Adjusted EBITDA performance targets for the three years to December . 

Directors’ interests in share options 

The table below shows the share options granted to Neil Johnson under the PRW PSP and the PRW CSOP. 

Jean-Yves Charlier does not hold any options over shares in the Company. 

No options were exercised or lapsed during the year. 

Directors’ interests in share options 

Date of 

grant 

At January 

 

Granted 

At 

31 December 


Exercise 

price 

(pence) 

Market price on 

date of grant 

(pence) 

Vesting 

period 

Exercise period (from/to) 

Neil Johnson 

PRW PSP 29 July 2011 — 240,000 1 240,000 Nil 59.75p 29 July 2014–29 July 2021 

PRW CSOP 29 July 2011 — 286,000 2 286,000 59.75p 59.75p 29 July 2014–29 July 2021 3 


. Options granted under the PRW PSP are subject to three annual performance targets which will be set annually around the start of each financial year (or, in respect 

of the first tranche of the awards, at the date of grant) and will be disclosed in the Directors’ Remuneration Report at the end of each performance year. Further 

detail on the performance targets is set out on page of this report. For the financial year ended December , , shares, being % of the first tranche, 

provisionally vested based as set out on page , of which % is subject to potential clawback if cumulative targets are not met over the three years to December . 

. Options granted under the PRW CSOP are subject to share price growth targets. % of the option will vest if the average share price of the Company for the 

consecutive -day period ending on July is at least .p with full vesting if the average share price for that period is at least p. Additionally, the option 

may vest in full on the third anniversary of grant if the average share price of the Company for the consecutive -day period ending on July is at least p. 

. Options will only be exercisable from July where the performance target is met at that date. Options will otherwise be exercisable from July subject 

to the performance targets.

48 




Total shareholder return (unaudited) 

The chart below illustrates the performance of the Company, since IPO on March , against the FTSE All Share Technology Hardware 

& Equipment price index and the FTSE All Share Index. 

The FTSE All Share Technology Hardware & Equipment price index has been chosen for comparison purposes as Promethean World Plc 

is a member of the index and it is therefore felt to be an appropriate comparator for TSR performance, as is the FTSE All Share Index. 

During the year ended December , shares in Promethean World Plc traded at prices in the range of .p to p per share. As at December , 

the closing share price was p. 

Signed 

Dante Roscini 

Chairman of the Remuneration Committee 

For and on behalf of the Board


Statement of Directors’ Responsibilities in Respect 

of the Annual Report and the Financial Statements 

The Directors are responsible for preparing the Annual Report and the Group 

and parent company financial statements in accordance with applicable law 

and regulations. 

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 IFRS 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 IFRS 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 . 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 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. 

Each of the Directors whose names and positions 

are set out on pages to confirms that, 

to the best of their 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 Directors’ Report 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 that 

they face. 

Approved by the Board and signed on its 

behalf by 




50 


Auditor's Report 

Independent Auditor’s Report 

to the members of Promethean World Plc 

We have audited the financial statements 

of Promethean World Plc for the year ended 

December set out on pages to . 

The financial reporting framework that has been 

applied in their preparation is applicable law 

and International Financial Reporting Standards 

(IFRSs) as adopted by the EU and, as regards 

the parent company financial statements, 

as applied in accordance with the provisions 

of the Companies Act . 

This report is made solely to the Company’s 

members, as a body, in accordance with Chapter 

of Part of the Companies Act . Our 

audit work has been undertaken so that we 

might state to the Company’s members those 

matters we are required to state to them in 

an auditor’s report and for no other purpose. 

To the fullest extent permitted by law, we do not 

accept or assume responsibility to anyone other 

than the company and the company’s members, 

as a body, for our audit work, for this report, 

or for the opinions we have formed. 

Respective responsibilities of directors 

and auditor 

As explained more fully in the Directors’ 

Responsibilities Statement set out on page , 

the directors are responsible for the preparation 

of the financial statements and for being satisfied 

that they give a true and fair view. Our 

responsibility is to audit, and express an opinion 

on, the financial statements in accordance with 

applicable law and International Standards on 

Auditing (UK and Ireland). Those standards 

require us to comply with the Auditing Practices 

Board’s (APB’s) Ethical Standards for Auditors. 

Scope of the audit of the financial 

statements 

A description of the scope of an audit of financial 

statements is provided on the APB’s website at 

www.frc.org.uk/apb/scope/private.cfm. 

Opinion on financial statements 

In our opinion: 

· the financial statements give a true and 

fair view of the state of the Group’s and 

of the parent company’s affairs as at 

December and of the Group’s 

Profit for the year then ended; 

· the Group financial statements have been 

properly prepared in accordance with IFRS 

as adopted by the EU; 

· the parent company financial statements have 

been properly prepared in accordance with 

IFRS as adopted by the EU and as applied 

in accordance with the provisions of the 

Companies Act ; and 

· the financial statements have been prepared 

in accordance with the requirements of the 

Companies Act and, as regards the 

Group financial statements, Article of the 

IAS Regulation. 

Opinion on other matters prescribed 

by the Companies Act 2006 

In our opinion: 

· the part of the Directors’ Remuneration 

Report to be audited has been properly 

prepared in accordance with the 

Companies Act ; 

· the information given in the Directors’ Report 

for the financial year for which the financial 

statements are prepared is consistent with 

the financial statements; and 

· information given in the Corporate Governance 

Statement set out on pages to with 

respect to internal control and risk management 

systems in relation to financial reporting 

processes and about share capital structures 

is consistent with the financial statements. 

Matters on which we are required 

to report by exception 

We have nothing to report in respect 

of the following: 

Under the Companies Act we are required 

to report to you if, in our opinion: 

· adequate accounting records have not been 

kept by the parent company, or returns 

adequate for our audit have not been received 

from branches not visited by us; or 

· the parent company financial statements 

and the part of the Directors’ Remuneration 

Report to be audited are not in agreement 

with the accounting records and returns; or 

· certain disclosures of directors’ remuneration 

specified by law are not made; or 

· we have not received all the information and 

explanations we require for our audit; or 

· a Corporate Governance Statement has not 

been prepared by the company. 

Under the Listing Rules we are required 

to review: 

· the Directors’ statement, set out on page , 

in relation to going concern; 

· the part of the Corporate Governance 

Statement on page relating to the 

company’s compliance with the nine provisions 

of the UK Corporate Governance Code 

specified for our review and 

· certain elements of the report to shareholders 

by the Board on Directors’ remuneration. 

M Newsholme (Senior Statutory Auditor) 

for and on behalf of KPMG Audit Plc 

Statutory Auditor 

Chartered Accountants 

Edward VII Quay 

Navigation Way 

Ashton on Ribble 

Preston PR2 2YF 

United Kingdom 

27 February 2012



Contents 


52 Consolidated Income Statement 


of Comprehensive Income 

53 Statements of Financial Position 

54 Consolidated Statement of Changes 

in Equity 

56 Company Statement of Changes 

in Equity 

57 Statements of Cash Flows 

58 Notes 



52 



Consolidated Income Statement 

for the year ended December 

Note 


£000 

 

£ 

Revenue 8 222,894 235,304 

Cost of sales (127,334) (133,513) 

Gross profit 95,560 101,791 

Operating expenses 10 (78,145) (80,712) 

Analysis of results from operating activities: 

Earnings before interest, tax, depreciation, amortisation, exceptional costs and share-based payments 31,109 33,105 

Depreciation and amortisation (excluding amortisation of acquired intangible assets) (7,687) (5,751) 

Amortisation of acquired intangible assets (796) (332) 

Exceptional costs 9 (5,963) (5,901) 

Exceptional income 9 1,282 — 

Share-based payments (530) (42) 

Results from operating activities 17,415 21,079 

Finance income 12 411 74 

Finance expense 12 (1,731) (4,001) 

Net finance expense 12 (1,320) (3,927) 

Profit before income tax 16,095 17,152 

Income tax expense 13 (4,923) (2,072) 

Profit for the year 11,172 15,080 

Earnings per share 

Basic earnings per share (pence) 24 5.59 8.50 

Diluted earnings per share (pence) 24 5.54 8.36 

. All attributable to equity shareholders. 

The profit for the year and earnings per share are entirely from continuing operations. 

The notes on pages to are an integral part of these financial statements. 

Consolidated Statement of Comprehensive Income 


Note 


£000 

 

£ 

Profit for the year from the income statement 11,172 15,080 

Foreign currency translation differences for foreign operations 12 993 985 

Net (loss)/gain on net investments in foreign operations 12 (120) 55 

Net change in fair value of cash flow hedges reclassified to profit and loss 12 — 184 

Income tax on other comprehensive income and expense recognised directly in equity 12 — (52) 

Total comprehensive income for the year 1 12,045 16,252 

. All attributable to equity shareholders. 

The profit for the year and earnings per share is entirely from continuing operations. 

The notes on pages to are an integral part of these financial statements.


Statements of Financial Position 

as at December 

Registered number 

Note 

Group 


£000 

Group 

 

£ 

Company 


£000 

Company 

 

£ 

Assets 

Property, plant and equipment 15 14,877 15,002 — — 

Intangible assets 16 160,839 156,033 — — 

Investments 17 — 2,939 90,091 89,434 

Deferred tax assets 19 2,087 2,860 — — 

Total non-current assets 177,803 176,834 90,091 89,434 

Inventories 20 18,237 19,816 — — 

Derivative financial instruments 18/29 356 59 — — 

Trade and other receivables 21 39,619 32,788 55,966 46,031 

Current tax assets 1,649 1,961 — — 

Cash and cash equivalents 22 21,802 14,506 111 — 

Total current assets 81,663 69,130 56,077 46,031 


Total assets 259,466 245,964 146,168 135,465 

Liabilities 

Trade and other payables 25 (32,841) (26,632) (11,953) (6,665) 

Derivative financial instruments 29 (83) (128) — — 

Provisions 26 (3,954) (2,754) — — 

Current tax liabilities (961) (66) — — 

Total current liabilities (37,839) (29,580) (11,953) (6,665) 

Trade and other payables 25 (37) (863) — — 

Provisions 26 (227) (1,833) — — 

Deferred tax liabilities 19 (1,686) (1,425) — — 

Total non-current liabilities (1,950) (4,121) — — 

Total liabilities (39,789) (33,701) (11,953) (6,665) 

Net assets 219,677 212,263 134,215 128,800 

Equity 

Share capital 23 20,000 20,000 20,000 20,000 

Share premium 23 99,796 99,796 99,796 99,796 

Capital reserve 23 93,990 93,990 — — 

Translation reserve (FCTR) 23 5,527 4,654 — — 

Retained earnings 23 364 (6,177) 14,419 9,004 

Total equity (all attributable to equity holders of the Company) 23 219,677 212,263 134,215 128,800 

These financial statements were approved by the Board of Directors on February and were signed on its behalf by: 


N A Johnson 

Director 


54 



Consolidated Statement of Changes in Equity 

Share 

capital 

£ 

Share 

premium 

£ 

Capital 

reserve 

£ 

Translation 

reserve 

£ 

Hedging 

reserve 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

Balance at 1 January 2010 4,785 — — 3,614 (132) (20,346) (12,079) 

Total comprehensive income for the year 

Profit for the year — — — — — 15,080 15,080 

Foreign currency translation differences — — — 985 — — 985 

Net gain on net investment in foreign 

operations — — — 55 — — 55 

Net change in fair value of cash flow 

hedges reclassified to profit and loss 

(net of tax) — — — — 132 — 132 

Total other comprehensive income — — — 1,040 132 — 1,172 

Total comprehensive income for the year — — — 1,040 132 15,080 16,252 

Transactions with owners, recorded 

directly in equity 

Contributions by and distributions 

to owners 

Conversion of preference shares and 

loan notes 2,716 100,781 — — — — 103,497 

Exchange of Chalkfree Ltd shares 

for Promethean World Plc shares 6,791 (6,791) — — — — — 

Effect of Group reconstruction — (93,990) 93,990 — — — — 

Issue of ordinary shares for cash 

(net of fees) 5,708 99,796 — — — — 105,504 

Dividends to equity holders — — — — — (2,090) (2,090) 

Share-based payments (net of tax) — — — — — 1,179 1,179 

Total contributions by and distributions 

to owners 15,215 99,796 93,990 — — (911) 208,090 

Balance at 31 December 2010 20,000 99,796 93,990 4,654 — (6,177) 212,263


Share 

capital 

£ 

Share 

premium 

£ 

Capital 

reserve 

£ 

Translation 

reserve 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

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 

The notes on pages to are an integral part of these financial statements. 


56 



Company Statement of Changes in Equity 

Share 

capital 

£ 

Share 

premium 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

Balance as at 6 January 2010 — — — — 

Total comprehensive income for the period 

Profit for the period — — 9,952 9,952 



Issue of ordinary shares 20,000 99,796 — 119,796 

Dividends to equity holders — — (2,090) (2,090) 

Share-based payments — — 1,142 1,142 

Balance at 31 December 2010 20,000 99,796 9,004 128,800 

Share 

capital 

£ 

Share 

premium 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

Balance as at 1 January 2011 20,000 99,796 9,004 128,800 

Total comprehensive income for the period 

Profit for the period — — 9,936 9,936 



Purchase of own shares by Employee Benefit Trust — — (889) (889) 


Share-based payments — — 657 657 

Balance at 31 December 2011 20,000 99,796 14,419 134,215 



Statements of Cash Flows 


Note 

Group 


£000 

Group 

 

£ 

Company 


£000 

Company 

 

£ 

Cash flows from operating activities 

Profit for the period 11,172 15,080 9,936 9,952 

Adjustments for: 

Depreciation 15 3,918 3,219 — — 

Amortisation of intangible assets 16 4,565 2,864 — — 

Impairment losses on property, plant and equipment 15 548 — — — 

Impairment losses on investments 17 2,939 — — — 

(Gain)/loss on sale of property, plant and equipment (7) 43 — — 

Net finance expense 12 1,320 3,927 64 48 

Income tax expense 13 4,923 2,072 — — 

Share-based payments 28 685 1,171 — — 

30,063 28,376 10,000 10,000 

Change in inventories 1,617 (3,291) — — 

Change in trade and other receivables (5,754) 2,675 (9,999) (46,079) 

Change in trade and other payables 4,048 231 5,288 6,665 

Change in provisions (604) 1,210 — — 

Cash generated from operations 29,370 29,201 5,289 (29,414) 

Finance cost paid (286) (28,796) — — 

Income tax paid (2,838) (4,436) — — 

Net cash inflow/(outflow) from operating activities 26,246 (4,031) 5,289 (29,414) 

Cash flows from investing activities 

Finance income received 69 74 — — 

Cash (outflow)/inflow from settlement of derivatives (204) 1,157 — — 

Proceeds from sale of property, plant and equipment 14 12 — — 

Acquisition of subsidiary, net of cash acquired — (5,732) — — 

Capital contribution to subsidiary undertaking — — — (74,000) 

Acquisition of property, plant and equipment 15 (4,277) (7,039) — — 

Development expenditure 16 (9,383) (7,947) — — 

Acquisition of other investments 17 — (1,336) — — 

Net cash used in investing activities (13,781) (20,811) — (74,000) 

Cash flows from financing activities 

Purchase of own shares by Employee Benefit Trust 23 (889) — (889) — 

Issue of new shares from IPO (net of costs) 23 — 105,504 — 105,504 

Dividends paid 23 (4,289) (2,090) (4,289) (2,090) 

Repayment of redeemed loan notes — (18,816) — — 

Repayment of deep discount bonds — (43,957) — — 

Repayment of other borrowing — (23,265) — — 

Payment of finance lease liabilities — (9) — — 



Net cash (used in)/received from financing activities (5,178) 17,367 (5,178) 103,414 

Net increase/(decrease) in cash and cash equivalents 7,287 (7,475) 111 — 

Cash and cash equivalents at January 14,506 21,791 — — 

Exchange rate effects 9 190 — — 

Cash and cash equivalents at 31 December 22 21,802 14,506 111 — 


58 



Notes 

(forming part of the financial statements) 

1 Reporting entity 

Promethean World Plc (‘the Company’) is a company registered in England and Wales. The address of the Company’s registered office 

is Promethean House, Lower Philips Road, Blackburn, Lancashire BB TH. 

The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group 

entities’) for the year ended December . 

The parent company financial statements present information about the Company as a separate entity and not about its Group. In accordance with 

Section of the Companies Act , the Company is exempt from the requirement to present its own profit and loss account. The amount of the 

profit for the financial year dealt with in the financial statements of the Company is £,, (: £,,). 

The Group’s Promethean brand is a world leader in the global market for interactive learning technology. The Group creates, develops, supplies and 

supports leading edge, interactive learning technology primarily for the education market. Promethean’s 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). 

Promethean also provides comprehensive training and support and, now with over one million members, the rapidly growing Promethean Planet 

(www.prometheanplanet.com) is the world’s largest online community for users of interactive learning technology, providing user-generated and 

premium content and is a forum for teachers to exchange ideas and experience. 

2 Basis of preparation 

(a) Statement of compliance 

Both the parent company financial statements and the Group financial statements have been prepared and approved by the Directors in accordance 

with International Financial Reporting Standards as adopted by the EU (Adopted IFRSs). 

The parent company financial statements and the Group financial statements were authorised for issue by the Board of Directors on February . 

(b) Basis of measurement 

The parent company and Group financial statements have been prepared on the historical cost basis except for all derivative contracts being carried 

at their fair value. 

The methods used to measure fair values are discussed further in note . 

(c) Going concern 

The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the 

Chief Executive Officer’s Review on pages to . The financial position of the Group, its cash flows, liquidity position and borrowing facilities 

are described in note . In addition note to the financial statements includes the Group’s objectives, policies and processes for managing its capital; 

its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. 

The Group Statement of Financial Position as at December shows net assets of £.m and net cash of £.m. 

On the basis of the existing banking facilities in place as at December and management’s forecasts, there is sufficient headroom for the Group 

to operate comfortably for the foreseeable future. 

Having made appropriate enquires, 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 Company and consolidated 

financial statements. 

(d) Functional and presentation currency 

These financial statements are presented in Pound Sterling, which is the Company’s functional currency. All financial information presented 

in Pound Sterling has been rounded to the nearest thousand. 

(e) Use of estimates and judgements 

The preparation of financial statements in conformity with Adopted IFRSs requires management to make judgements, estimates and assumptions 

that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from 

these estimates. 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which 

the estimates are revised and in any future periods affected.


2 Basis of preparation continued 

(e) Use of estimates and judgements continued 

Information about significant areas of estimation uncertainty in applying accounting policies that have the most significant effect on the amounts 

recognised in the consolidated financial statements is included in the following notes: 

· note – taxation; 

· note – measurement of the recoverable amounts and value in use of cash-generating units containing goodwill; 

· note – valuation of intangible assets; 

· note – valuation of financial instruments; and 

· note – bad debt provisions. 

The accounting policy descriptions set out the areas where judgement needs exercising, the most significant of which are revenue recognition, research 

and development, goodwill and intangible assets and financial instruments, and are outlined below: 

· Revenue recognition – Determining when the significant risks and rewards of ownership have been transferred to the buyer and that recovery 

of the consideration is probable. 

· Research and development – Determining that development costs can be reliably measured, that the product or process is technically and 

commercially feasible and that future economic benefits are probable. 

· Goodwill and intangible assets – The Group tests goodwill for impairment at least annually. Judgement is required when allocating goodwill and 

intangible assets to cash generating units for impairment testing purposes. 

· Financial instruments – Determining whether a derivative financial instrument should be classified as a qualifying hedging instrument. 

Information on critical judgements made in applying accounting policies, including details of significant methods and assumptions used, is included 

in notes and . The areas where the Group has estimated the fair value of assets and liabilities are outlined in note and the financial risk 

management policies are detailed in note . 

3 Significant accounting policies 

The accounting policies set out below have been applied consistently to all periods presented in these Group and Company financial statements 

and have been applied consistently by Group entities. 

(a) Basis of consolidation 

The Group financial statements consolidate the financial statements of the Company and entities controlled by the Company, all of which are made up to 

December each year. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to 

obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial 

statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. 

Acquisitions are accounted for under the acquisition method. The results of subsidiaries disposed of in the year are included in the consolidated statement 

of comprehensive income up to the date of disposal. In the prior year the acquisition by Promethean World Plc of Chalkfree Limited and its subsidiaries 

was accounted for using reverse asset acquisition principles such that the results of Chalkfree Limited and its subsidiary undertakings are included in 

the comparative periods. 

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing 

the consolidated financial statements. 



60 



Notes continued 


3 Significant accounting policies continued 

(b) Foreign currency 

(i) Foreign currency transactions 

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the 

transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at 

the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated 

to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation 

are recognised in profit or loss, except for differences arising on a financial asset considered to be part of the net investment in the foreign subsidiary 

which are recognised directly in equity (see (b)(iii) below). 

(ii) Foreign operations 

The assets and liabilities of foreign operations are translated to Pound Sterling at exchange rates at the reporting date. The income and expenses 

of foreign operations are translated to Pound Sterling at average exchange rates which approximate to actual rates for the relative accounting periods. 

Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency translation reserve (FCTR) within 

equity. When a foreign operation is disposed of in full the cumulative amount in the translation reserve related to the foreign operation is reclassified 

to profit or loss as part of the gain or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the Group would 

re-attribute the proportionate share of the cumulative amount of the exchange differences recognised in other comprehensive income to the 

non-controlling interests in that foreign operation. In any other partial disposal of a foreign operation the Group would reclassify to profit 

or loss only the proportionate share of the cumulative amount of the exchange differences recognised in other comprehensive income. 

(iii) Net investment in foreign operation 

Foreign exchange gains and losses arising from a monetary item receivable from a foreign operation, the settlement of which is neither planned 

nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation. 

Foreign currency differences arising on the retranslation of a financial asset designated as a net investment in a foreign operation are recognised 

in other comprehensive income and are presented in the FCTR within equity. When the net investment is disposed of, the relevant amount in the 

FCTR is transferred to profit or loss as part of the gain or loss on disposal. 

(c) Financial instruments 

(i) Non-derivative financial instruments 

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. 

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly 

attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. 

Cash and cash equivalents comprise cash balances and current balances with banks and are held at amortised cost. 

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. 

(ii) Derivative financial instruments 

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Derivatives are recognised initially at 

fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair 

value. When a derivative financial instrument is not designated in a qualifying hedge relationship, all changes in its fair value are recognised immediately 

in profit or loss. 

(iii) Cash flow hedges 

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the 

hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised immediately in the statement of comprehensive income. 

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is 

discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. If the hedged 

transaction is no longer expected to take place, the cumulative unrealised gain or loss in equity is recognised in the statement of comprehensive income 

immediately. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is 

recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss. 

(iv) Share capital 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, 

net of any tax effects. 

Preference share capital was classified as a liability as it was redeemable on a specific date or at the option of the shareholders. Dividends were 

recognised as interest expense in profit or loss as accrued.



(d) Business combinations 

The Group has applied IFRS () Business Combinations for all business combinations occurring on or after January . 

Business combinations are accounted for by applying the acquisition method as at the acquisition date, which is the date on which control is transferred 

to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain the benefits of its activities. 

Acquisitions on or after January 

For acquisitions on or after January , the Group measures goodwill as: 

· the fair value of the consideration transferred; plus 

· the recognised amount of any non-controlling interests in the acquiree; plus 

· if the business combination is achieved in stages, the fair value of the existing interest in the acquiree; less 

· the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. 

When the excess is negative, a bargain purchase gain would be recognised immediately in profit or loss. 

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in 

profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection 

with a business combination are expensed as incurred. 

Any contingent consideration payable is recognised at the fair value at the acquisition date. If the contingent consideration is classified as equity, 

it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration 

are recognised in profit or loss. 

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s 

awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration 

transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the 

market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service. 

Acquisitions prior to January 

For acquisitions prior to January , goodwill represents the excess of the cost of acquisition over the Group’s interest in the recognised amount 

(generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase 

gain was recognised immediately in profit or loss. 

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business 

combinations were capitalised as part of the cost of acquisition. 

(e) Investments 

Investments represent equity interests where the Company does not have significant interest or control. 

The Group’s investment in equity interests is classified as an available-for-sale financial asset. Subsequent to initial recognition, they are measured at fair 

value and changes therein, other than impairment losses and foreign currency differences, are recognised in other comprehensive income and presented 

within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to 

profit or loss. 

The Company’s investments represent equity interests in subsidiary undertakings where the Company has significant interest or control. Investments are 

recognised at cost less impairment losses. 

(f) Property, plant and equipment 

(i) Recognition and measurement 

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. 



(ii) Subsequent costs 

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future 

economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part 

is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

62 






(f) Property, plant and equipment continued 

(iii) Depreciation 

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. 

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership 

by the end of the lease term. Land is not depreciated. 

The estimated useful lives for the current and comparative periods are as follows: 

· Freehold buildings years 

· Plant and equipment – years 

Depreciation methods, useful lives and residual values are reviewed at each reporting date. 

(g) Intangible assets 

(i) Goodwill 

Goodwill (or negative goodwill) arises on the acquisition of subsidiaries. 

For measurement of goodwill at initial recognition, see note (d). 

Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but tested annually 

for impairment. 

(ii) Research and development 

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised 

in profit or loss when incurred. 

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure 

is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits 

are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised 

includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. The Group does 

not have any borrowing costs that specifically relate to qualifying assets. All other development expenditure is recognised in profit or loss as incurred. 

Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. 

(iii) Other intangible assets 

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated 

impairment losses. Other intangibles include interactive lesson content. 

(iv)Subsequent expenditure 

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other 

expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. 

(v) Amortisation 

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date 

that they are available for use. The estimated useful lives for the current and comparative periods are as follows: 

· Internally generated development assets – years 

· Acquired development assets – years 

· Acquired customer contracts and relationships – years 

(h) Leased assets 

Leases under which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Upon initial 

recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. 

Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. 

Other leases are operating leases and the leased assets are not recognised in the Group’s statement of financial position. 

(i) Inventories 

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle and includes expenditure 

incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. 

In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.



(j) Cash and cash equivalents 

Cash and cash equivalents comprise cash balances, call deposits and other short term highly liquid investments with maturities of three months or less. 

(k) Impairment (excluding inventories and deferred tax assets) 

The carrying amounts of the Group’s assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment; 

a financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future 

cash flows of that asset. If any such indication exists, the asset’s recoverable amount is estimated. 

The carrying value of the development assets and their remaining asset lives are reviewed periodically. In the event that projects or product lines have 

been discontinued then the corresponding development asset will be fully amortised. To the extent that management is aware of a reduction in demand 

for a particular product line, a review of forecast sales will be used to determine whether the reduction in demand has given rise to an impairment. 

The carrying value and remaining asset lives of customer contracts, acquired through business combinations, are reviewed every six months taking into 

consideration any changes to contract terms in that period and how those changes will impact future cash flows under that contract. 

For goodwill, the recoverable amount is estimated at the end of each reporting date. 

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses 

are recognised in the statement of comprehensive income. 

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to 

cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. A cash-generating unit is the smallest 

identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. 

Calculation of recoverable amount 

The recoverable amount of the Group’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted 

at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short 

duration are not discounted. 

The recoverable amount of other assets is the greater of their fair values less costs to sell and value in use. In assessing value in use, the estimated future 

cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and 

the risks specific to the asset. 

For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which 

the asset belongs. 

Reversals of impairment 

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related 

objectively to an event occurring after the impairment loss was recognised. 

An impairment loss in respect of goodwill is not reversed. 

In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been 

a change in the estimates used to determine the recoverable amount. 

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been 

determined, net of depreciation or amortisation, if no impairment loss had been recognised. 

(l) Employee benefits 

(i) Defined contribution plans 

Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when services are 

rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. 



(ii) Termination benefits 

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal 

detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to 

encourage voluntary redundancy. 

(iii) Short-term benefits 

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. 

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal 

or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

64 






(l) Employee benefits continued 

(iv) Share-based payment transactions 

The grant date fair value of share-based payment awards granted to employees is recognised as a personnel expense, with a corresponding increase 

in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect 

the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised 

as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based 

payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no 

true-up for differences between expected and actual outcomes. 

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense with 

a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to payment. The liability is remeasured 

at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss. 

Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted 

for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Group. 

(m) Provisions 

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, 

and it is probable that an outflow of economic benefits will be required to settle the obligation. 

(i) Warranties 

A provision for warranties is recognised when underlying products or services are sold. The provision is based on historical warranty data and 

a weighting of all possible outcomes against their associated probabilities. 

(ii) Onerous contracts 

A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of meeting its 

obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected 

net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on associated assets. 

(n) Revenue recognition 

(i) Goods sold 

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume 

rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration 

is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods 

and the amount of revenue can be measured reliably. 

All revenue is reported exclusive of value-added tax and other sales taxes. 

(ii) Sale of software 

The Promethean global software licence provided with the sale of hardware includes only a short-term warranty that guarantees the software will function 

in accordance with the published specification for days from purchase. The Group has no contractual obligation to provide ongoing support or updates 

to this software. As a result the Group recognises revenue when the significant risks and rewards of ownership has been transferred to the customer. Other 

software that the Group provides which are not essential to the functionality of the hardware are sold and accounted for separately. For this software sold 

stand alone: 

· subscription revenue is recognised pro-rata over the term of the contract; and 

· revenue in respect of the provision of contractual maintenance and upgrades are deferred over the licence term. 

(iii) Maintenance contract sales 

Revenue from maintenance contracts, extended warranties and enhanced service sales are recognised on straight-line basis over the period of the 

contract as services are provided equally over the course of the contract. 

Payments received in advance of services are recorded in the statement of financial position as deferred income and are recognised in the statement 

of comprehensive income proportionately over the period that the services are provided. 

(iv) Training sales 

Revenue from sales of training is recognised once the training has been provided.



(o) Lease payments 

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received 

are recognised as an integral part of the total lease expense, over the term of the lease. 

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. 

The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance 

of the liability. 

(p) Finance income and expenses 

Finance income comprises interest income on funds invested, changes in the fair value of financial assets at fair value through profit or loss and gains on 

hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. 

Finance expenses comprise interest expense on borrowings, dividends on preference shares classified as liabilities, changes in the fair value of financial 

assets at fair value through profit or loss, impairment losses recognised on financial assets and losses on hedging instruments that are recognised in profit 

or loss. All borrowing costs are recognised in profit or loss using the effective interest method. 

Foreign currency gains and losses are reported on a net basis. 

(q) Income tax 

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items 

recognised directly in equity or in other comprehensive income. 

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, 

and any adjustment to tax payable in respect of previous years. 

Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets 

and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised in respect of temporary differences 

relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the 

tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted 

by the reporting date. 

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference 

can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related 

tax benefit will be realised. 

(r) Exceptional costs 

Exceptional costs are those that in management’s view need to be disclosed by virtue of their size and non-recurring nature. Such items are included 

in the income statement under a caption to which they relate and are separately disclosed in the notes to the consolidated financial statements. 

(s) Earnings per share 

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss 

attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted 

for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number 

of ordinary share outstanding, adjusted for own shares held, for the effect of all dilutive potential ordinary shares, which comprise share options granted 

to employees. 

(t) Segment reporting 

The Group’s primary format for segment reporting is based on geographical sales destination. The geographical segments are determined based on 

the Group’s management and internal reporting structure. The operating results for each segment are reviewed regularly by the Directors, to make 

decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. 



66 






(u) New standards and interpretations not yet adopted 

The following new standards, amendments to standards and interpretations issued by the International Accounting Standards Board became effective 

during the year, but have no material effect on the Group’s financial statements: 

· IAS Related Party Disclosures (revised) 

· IFRIC Extinguishing Financial Liabilities with Equity Instruments 

· Improvements to IFRSs 

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January and have not 

been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial 

statements of the Group. 

4 Determination of fair values 

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and 

liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further 

information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. 

(i) Property, plant and equipment 

The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of items 

of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items. 

(ii) Intangible assets 

Whilst goodwill is held at cost and development costs are valued at cost less amortisation, their carrying values are assessed to ensure that they do 

not exceed the lower of net realisable value and value (MRV) in use at the end of each reporting period. The fair value of goodwill is based on the 

discounted cash flows of the cash-generating units or product revenue as outlined in note . 

The fair values of intangible assets recognised as a result of a business combination are based on market values, as determined by an independent valuation. 

The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of products developed. 

(iii) Trade and other receivables 

The fair value of short-term trade and other receivables is deemed to be its book value less any impairment provision. The effect of discounting 

is considered to be immaterial. 

(iv) Derivatives 

The fair value of forward exchange contracts and interest rate swaps and caps are based on market valuations. 

(v) Non-derivative financial liabilities 

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted 

at the market rate of interest at the reporting date. 

5 Financial risk management 

Overview 

The Group has exposure to the following risks from its use of financial instruments: 

· credit risk; 

· liquidity risk; and 

· market risk. 

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and 

managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. 

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Executive Directors 

report regularly to the Board of Directors on Group risk management.


5 Financial risk management continued 

Credit risk 

All trade receivable exposures are overseen by the Global Credit Manager. Trade receivables from North American customers are followed up from 

the US with oversight by the Global Credit Manager. The UK credit control team also looks after trade receivables for the International division. 

Credit limits are set as deemed appropriate for the customer. Sales to distributors and resellers are made based on recommended credit limits and, 

where management feels it is appropriate and is able to obtain the necessary cover, credit insurance is used. 

Liquidity risk 

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, 

under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. 

The Group has in place a five-year £m multicurrency revolving credit facility that can be drawn on the day of request; this facility will expire in 

March . The interest rate is basis points over LIBOR. The revolving credit facility was undrawn at December (: undrawn). 

In addition the Group manages all of its external bank relationships centrally in accordance with defined treasury policies. The policies include 

the minimum acceptable credit rating of relationship banks and financial transaction authority limits. Any material change to the Group’s principal 

banking facility requires Board approval. The Group seeks to mitigate the risk of bank failure by ensuring that it maintains relationships with a number 

of investment grade banks. 

As at December , the Group was cash positive with no outstanding external loans or borrowings. 

Market risk 

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value 

of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable 

parameters, while optimising the return. 

Currency risk 

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of Group 

entities, primarily Sterling (GBP), US Dollars (USD), Euros and the Chinese Renminbi (CNY). Transactions outside of these currencies are limited. 

The Group reviews its net currency exposures for a rolling twelve-month period. The Group purchases the majority of its raw materials in USD which 

offsets a proportion of USD sales thereby reducing net foreign exchange exposure. 

In calculating its net transaction exposure, the Group takes into account its trade receivables and trade payables denominated in a foreign currency. 

The Group uses forward exchange contracts as an economic hedge against currency risk, where cash flow can be judged with reasonable certainty. 

Foreign exchange swaps and options may be used to hedge foreign currency receipts in the event that the timing of the receipt is less certain. 

Interest rate risk 

As at December , the Group was cash positive with no outstanding external loans or borrowings. 

Other market price risk 

The Group does not enter into commodity contracts other than to meet the Group’s expected usage and sale requirements; such contracts are not 

settled net. 

Capital management 

The Board seeks to build a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. 

The Group manages its capital on a short and long term basis. In the short term the net cash position is monitored. This includes cash, cash equivalents, 

short term deposits and debt. In the long term the Group monitors shareholders’ funds plus debt. 

The Group currently has a positive net cash position of £.m (: £.m) and continues to carry no debt therefore the long term capital 

employed is equivalent to the shareholders’ funds as at December of £.m (: £.m). 

As outlined in note and the Directors’ Remuneration Report, the Group has share incentive schemes to further align executive management’s 

interests with those of the ordinary shareholders. 

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 



68 





6 Operating segments 

The Group previously comprised of four reportable segments based on the destination of sales. As part of the reorganisation of the business to resize 

the Group’s cost base given prevailing market conditions, which commenced in the final quarter of and was completed in , the sales regions 

of Continental Europe, UK & Ireland and the Rest of the World have been combined into one International division. Consequently, there are 

now only two reportable segments identified by the Group and they do not arise as a result of an aggregation process. Prior year comparatives have 

been restated on this basis. Each segment offers similar products but are managed separately on a geographical basis. The Board (CODM) reviews 

internal management reports on these segments on a monthly basis. Performance by segment is managed and reviewed to gross profit. For internal reporting 

purposes, aside from trade receivables, no allocation is made between these segments for balances in the statement of financial position, as, regardless of 

an asset’s geographical location, it could serve each business segment. Disclosures for segment performance are provided in the tables below and overleaf: 


Group 

North 

America 

£000 

International 

£000 

Revenue 129,650 93,244 222,894 

Reportable segmental profit (gross profit) 57,669 37,891 95,560 

Reportable segmental assets (trade receivables) 13,200 19,132 32,332 

Total 

Group 

£000 

2010 (as restated) 

Group 

North 

America 

£ 

International 

£ 

Total 

Group 

£ 

Revenue 151,163 84,141 235,304 

Reportable segmental profit (gross profit) 67,720 34,071 101,791 

Reportable segmental assets (trade receivables) 14,314 13,504 27,818 

Inter-segment trading 

Inter-segment trading and profitability is not included in the information provided to the CODM and consequently has not been disclosed above. 

Revenue for each reportable segment reflects sales to external customers only. Reported segmental profits are adjusted for inter-segment profits 

and as such are stated using the costs to the Group rather than for each segment. 

Reconciliation to profit before income tax 

Group 


£000 

 

£ 

Reportable segmental profit (gross profit) 95,560 101,791 

Sales and marketing expenses (46,086) (50,715) 

Administrative expenses (11,162) (11,622) 

Research and development (net) (7,203) (6,349) 

Adjusted EBITDA 31,109 33,105 

Depreciation (3,918) (3,219) 

Amortisation (3,769) (2,532) 

Amortisation of acquired intangibles (796) (332) 

Exceptional costs (5,963) (5,901) 

Exceptional income 1,282 — 

Share-based payments (530) (42) 

Net finance expense (1,320) (3,927) 

Profit before income tax 16,095 17,152


6 Operating segments continued 

Reconciliation to total assets per statement of financial position 

Group 

Total assets for reportable segments 32,332 27,818 

Unallocated amounts: 

All current assets excluding trade receivables 49,331 41,312 

All non-current assets 177,803 176,834 

Total assets for the entity 259,466 245,964 


£000 

 

£ 


The only assets that the Group separately identifies by its segments are trade receivables. All other categories of asset and liability could serve each 

business segment and so are not allocated to a segment for the purposes of internal or statutory reporting. 

Revenue by product 

Group 


£000 

 

£ 

Interactive display systems and accessories 196,228 198,291 

Learner response systems 26,666 37,013 

222,894 235,304 

Interactive display systems and accessories revenue by region 

Group 


£000 

Restated 

 

£ 

North America 106,982 117,881 

International 89,246 80,410 

196,228 198,291 

Learner response systems revenue by region 

Group 


£000 

Restated 

 

£ 



26,666 37,013 

Revenue by country 

Unites States 126,367 147,896 

United Kingdom (Company’s country of domicile) 15,983 15,883 

Italy 11,345 1,047 

Australia 8,102 8,472 

Germany 6,312 4,963 

Spain 5,725 7,863 

Netherlands 5,227 4,241 

France 5,061 5,407 

Other countries 38,772 39,532 

222,894 235,304 


£000 

 

£ 


70 





6 Operating segments continued 

Major customers 

For there was one customer (: two customers) who individually represents in excess of % of Group revenues for the year. Revenue from 

this customer was £.m (: two customers, £.m). 

Whilst this customer represents a significant proportion of Group revenue, it is a distributor and not the actual end-user of the Group’s products. 

The customers are primarily customers of the North American business segment. 

Geographical locations 

The analysis of non-current assets excluding derivatives and deferred tax, by geographical location, is identified below: 

Non-current assets 

Group 


£000 

 

£ 

United Kingdom 157,823 155,301 

France 406 445 

Germany 363 359 

USA 14,877 15,418 

China 2,247 2,451 

175,716 173,974 

7 Acquisition of subsidiary 

In the Company acquired % of the ordinary shares of SynapticMash Inc., for initial cash consideration of $.m, with an additional $m 

of deferred consideration paid on January . 

Further payments of up to $.m were potentially payable to the vendors months after the date of acquisition, contingent on the achievement 

of revenue targets and the retention of key SynapticMash employees. Of this amount a further $.m, in respect of the retention of key staff, 

was paid to the vendors in January . 

The targets in respect of sales of the LearningQube software and sales of Promethean’s LRS devices were not met so $m of the contingent consideration 

is not payable. As a consequence the Group is recognising exceptional income of £,, (see note ). The movement in fair value of the contingent 

consideration since acquisition is disclosed in note . 

Goodwill recognised on acquisition has been tested for impairment, the details of which are disclosed in note . The goodwill was not impaired 

as at December . 

8 Revenue 

Continuing operations 


£000 

 

£ 

Sales of goods 220,689 233,047 

Services 2,205 2,257 

222,894 235,304 

Services include maintenance and training.


9 Exceptional items 

Exceptional costs 

Reorganisation costs 2,869 3,541 

Impairment of investment in Flatfrog Laboratories A.B. 2,939 — 

Share-based payment charge in respect of one-off IPO option scheme 155 1,129 

One-off IPO cash bonus — 581 

SynapticMash Inc. acquisition related costs — 457 

SynapticMash Inc. employee retention costs — 193 

5,963 5,901 


£000 

 

£ 


Exceptional income 


£000 

 

£ 

Release of provision for contingent consideration 1,282 — 

1,282 — 

Reorganisation costs 

The Group incurred £,, of reorganisation costs in (: £,,), completing the reorganisation that commenced in the fourth quarter 

of . This comprises £,, of restructuring costs and £,, relating to relocation of the Group’s Blackburn based operations to a new site 

in Lancashire, primarily comprising of a £, onerous lease provision on its current headquarters, and related asset impairments of £,. 

Impairment of investment in Flatfrog Laboratories A.B. (Flatfrog) 

As outlined in note , the Group has written down its investment in Flatfrog to £nil and recognised an exceptional impairment charge of £,,. 

IPO related costs 

The exceptional share-based payments charge in relates to the final tranche of IPO share options that vested in March . 

Contingent consideration re. SynapticMash Inc. acquisition 

In , the Group is recognising exceptional income of £,, relating to the release of the contingent consideration provision, as the targets 

in respect of sales of the LearningQube software and sales of Promethean’s LRS devices were not met (see note ). 


72 





10 Expenses and auditors’ remuneration 

Included in profit/loss are the following: 

Group 


£000 

 

£ 

Impairment loss on trade receivables and prepayments 108 323 

Reorganisation costs included in operating expenses 5,808 3,541 

Research and development expensed as incurred 7,203 6,349 

Auditors’ remuneration: 

Audit of these financial statements 5 5 

Amounts receivable by auditor and their associates in respect of: 

Audit of financial statements of subsidiaries pursuant to legislation 174 177 

Other services relating to taxation 33 43 

IPO related services — 580 

All other services 16 37 

Total auditors’ remuneration 228 842 

Operating expenses are analysed as follows: 

Group 


£000 

 

£ 

Sales and marketing 46,086 50,715 

Administrative 11,162 11,622 

Total research and development expenditure 16,131 14,296 

Less: capitalised development expenditure (8,928) (7,947) 

Research and development (net) 7,203 6,349 

Depreciation 3,918 3,219 

Amortisation 3,769 2,532 

Amortisation of acquired intangible assets 796 332 

Exceptional costs 5,963 5,901 

Exceptional income (1,282) — 

Share-based payments 530 42 

78,145 80,712 

11 Personnel expenses 

Group 


£000 

 

£ 

Wages and salaries 41,238 40,614 

Social security contributions 4,050 3,784 

Contributions to defined contribution plans 1,138 1,047 

Share-based payments 685 1,171 

47,111 46,616


11 Personnel expenses continued 

The average number of persons employed by the Group during the year was: 

2011 

Production 174 181 

Research and development 139 135 

Selling and distribution 443 492 

Administration 129 132 

885 940 


Directors’ emoluments are disclosed in the Directors’ Remuneration Report on page . 

12 Finance income and expense 

Recognised in profit or loss 

Group 


£000 

 

£ 

Interest income on bank deposits 69 74 

Net change in fair value of financial assets at fair value through profit or loss 342 — 

Finance income 411 74 

Interest expense on bank and other loans (198) (627) 

Interest on loan notes and deep discount bonds — (1,964) 

Debt issue costs amortised (64) (176) 

Preference share dividends — (829) 

Foreign exchange losses (1,194) (284) 

Fair value adjustment to deferred/contingent consideration (275) (107) 

Net change in fair value of financial assets at fair value through profit or loss — (14) 

Finance expense (1,731) (4,001) 

Net finance expense recognised in profit or loss (1,320) (3,927) 

The above financial income and expense includes the following in respect of assets/(liabilities) 

not at fair value through profit or loss: 

Total interest income on financial assets 69 74 

Total interest expense on financial liabilities (263) (3,596) 


74 





12 Finance income and expense continued 

Recognised directly in equity 

Group 


£000 

 

£ 

Foreign currency translation differences for foreign operations 993 985 

Net (loss)/gain on net investment in foreign operations (120) 55 

Net change in fair value of cash flow hedges reclassified to profit and loss — 184 

Income tax on income and expense recognised directly in equity — (52) 

Finance income recognised directly in equity, net of tax 1 873 1,172 

. All attributable to equity holders of the Company. 


£000 

 

£ 

Recognised in: 

Hedging reserve — 132 

Translation reserve (FCTR) 873 1,040 

Finance income recognised directly in equity, net of tax 873 1,172 

13 Income tax expense 

Group 


£000 

 

£ 

Current tax expense 

Current period 3,744 1,747 

Foreign taxation 8 29 

Adjustment for prior periods 248 (239) 

Current tax expense 4,000 1,537 

Deferred tax expense 

Origination and reversal of temporary differences 1,646 745 

Reduction in tax rates (64) 66 

Recognition of previously unrecognised tax losses — (389) 

Adjustments for prior periods (659) 113 

Deferred tax expense 923 535 

Total tax expense 4,923 2,072


13 Income tax expense continued 

Reconciliation of effective tax rate 

Group 

Profit for the period 11,172 15,080 

Total income tax expense 4,923 2,072 

Profit excluding income tax 16,095 17,152 

Income tax expense using the Company’s domestic tax rate 26.5% 4,263 28.0% 4,803 

Effect of tax rates in foreign jurisdictions 2.5% 400 (5.1%) (878) 

Reduction in tax rate (0.6%) (100) (0.3%) (55) 

Non-deductible expenses 7.5% 1,208 7.5% 1,296 

Non taxable income (2.1%) (343) — — 

Tax incentives (1.7%) (271) — — 

Recognition of previously unrecognised tax losses — — (2.3%) (389) 

Change in unrecognised temporary differences 1.1% 177 (15.0%) (2,579) 

Over provided in prior periods (2.6%) (411) (0.7%) (126) 

Total income tax expense 30.6% 4,923 12.1% 2,072 

Income tax recognised directly in equity 

Group 

Derivatives — 52 

Share-based payments 111 (37) 

Total income tax debited/(credited) directly to equity 111 15 

Factors that may affect future tax charges 

On March the Chancellor announced the reduction in the main rate of UK corporation tax to % with effect from April . 

The chancellor also proposed changes to further reduce the main rate of corporation tax by % per annum to % by April . The effect 

of these reductions has reduced the current rate of tax applied for the year to .%. 

The second reduction to % was substantively enacted on July . The substantively enacted rate at the balance sheet date of % has been 

applied to create a reduction in the deferred tax liability, which has been included in the figures above. 

14 Dividends per ordinary share 

On July the Directors declared an interim dividend of .p per share (: .p), totalling £,, (: £,,), which was 

paid to shareholders on September . 

The Directors propose a final dividend of .p per share (: .p), or £,,, in respect of the year ended December , the total 

dividend for the year being .p per share or £,, (: £,,). Subject to the approval by shareholders at the Annual General 

Meeting, the final dividend will be paid on May to shareholders on the register on April . The ex-dividend date is April . 


Rate % 


£000 

 

Rate % 


£000 

 

£ 

 

£ 



76 





15 Property, plant and equipment 

Group 

Freehold land 

and buildings 

£ 

Plant and 

equipment 

£ 

Total 

£ 

Cost 

Balance at January 2,726 13,090 15,816 

Additions 1,327 5,712 7,039 

Acquisitions through business combinations 1 62 63 

Exceptional write-off — (213) (213) 

Disposals (5) (482) (487) 

Effect of movements in exchange rates (30) 242 212 

Balance at 31 December 2010 4,019 18,411 22,430 

Balance at January 4,019 18,411 22,430 

Additions 410 3,867 4,277 

Disposals (15) (467) (482) 

Effect of movements in exchange rates 8 164 172 

Balance at 31 December 2011 4,422 21,975 26,397 

Depreciation and impairment losses 

Balance at January 577 4,001 4,578 

Depreciation for the year 237 2,982 3,219 

Disposals (5) (428) (433) 


Balance at 31 December 2010 810 6,618 7,428 

Balance at January 810 6,618 7,428 

Depreciation for the year 337 3,581 3,918 

Impairment loss 274 274 548 

Disposals (3) (458) (461) 


Balance at 31 December 2011 1,423 10,097 11,520 

Carrying amounts 

At January 2,149 9,089 11,238 

At December 3,209 11,793 15,002 

At 31 December 2011 2,999 11,878 14,877 

The Company had no property, plant and equipment as at either December or December . 

Security 

At December and at December , no assets were pledged as security.


16 Intangible assets 

Group 

Goodwill 

£ 

Development 

costs 

£ 

Customer 

contracts 

£ 

Cost 

Balance at January 136,351 8,374 — 144,725 

Additions arising from internal development — 7,947 — 7,947 

Acquisitions through business combinations 4,202 4,537 194 8,933 

Exceptional write-off — (1,062) — (1,062) 

Effect of movements in exchange rates (12) (23) — (35) 

Fully amortised assets written off — (113) — (113) 

Balance at 31 December 2010 140,541 19,660 194 160,395 

Balance at January 140,541 19,660 194 160,395 

Additions arising from internal development — 8,928 — 8,928 

External additions — 455 — 455 

Effect of movements in exchange rates 5 (1) — 4 

Balance at 31 December 2011 140,546 29,042 194 169,782 

Amortisation and impairment losses 

Balance at January — 1,602 — 1,602 

Amortisation for the year — 2,837 27 2,864 

Effect of movements in exchange rates — 9 — 9 

Fully amortised assets written off — (113) — (113) 

Balance at 31 December 2010 — 4,335 27 4,362 

Balance at January — 4,335 27 4,362 

Amortisation for the year — 4,503 62 4,565 

Effect of movements in exchange rates — 13 3 16 

Balance at 31 December 2011 — 8,851 92 8,943 

Carrying amounts 

At January 136,351 6,772 — 143,123 

At December 140,541 15,325 167 156,033 

At 31 December 2011 140,546 20,191 102 160,839 

Total 

£ 



78 





16 Intangible assets continued 

Impairment testing for cash-generating units containing goodwill 

The majority of the Group’s goodwill arose in November and represents the premium of consideration paid by Chalkfree Limited for the book assets of 

the Promethean (Holdings) Limited group. When this goodwill arose the management reporting at the time was centred on the performance of the statutory 

entities. As the Group has grown in size and expanded internationally, all sales to external markets, aside from a relatively small quantity of external sales in 

China, are routed through the UK business. The level of profitability of the non-UK subsidiaries is determined by transfer pricing agreements. 

In the Group acquired % of SynapticMash Inc. and the goodwill arising on the transaction was c.£.m. Since the acquisition, the entity 

SynapticMash Inc. has been integrated into Promethean’s existing operations. 

Having reviewed the definitions of operating segments and cash generating units (CGUs) and considered how the business manages and monitors its 

goodwill, the Board is of the opinion that the most appropriate allocation of goodwill to CGUs, following the internal reorganisation, are the Group’s 

regional operations of North America and International. The revised allocation of goodwill to CGU’s replaces the statutory entity basis disclosed previously. 

Contained within the International division is the corporate management team which inter alia controls the strategy, investment requirements and 

intellectual property of the Group through a centralised manufacturing process, and centralised product development facility to ensure that one 

suite of products is sold throughout the world. The North America CGU is primarily a sales and distribution division whose ultimate cash flows 

are determined by transfer price principles. 

The goodwill is allocated to the CGUs and tested for impairment. In accordance with IAS Impairment of Assets impairment tests on goodwill 

are performed annually or when an indicator of impairment is present. 

Goodwill is allocated to CGUs as shown in the table below: 

Group 


£000 

Restated 

 

£ 



140,546 140,541 

The recoverable amounts of all CGUs are based on value in use calculations. Value in use is determined by discounting the future cash flows generated 

from the continuing use of each CGU. It is considered appropriate to use a five-year forecast period and subsequently into perpetuity, with a discount 

rate applied. 

The cash flow projections are based on the budgets, forecasts, strategic plans, knowledge of the market, and historic and forecast performance of the sector. 

Revenue growth and operating margins 

Revenue growth assumptions are based on financial budgets and forecasts approved by the Board, and take into account the Group’s historical 

experience in the context of wider industry and economic conditions and information obtained from external industry sources; examples of which 

are market penetration characteristics, technology adoption trends and relevant education budget projections (: same basis). 

Whilst the macroeconomic uncertainty is still evident, the Group has maintained its strong market position. The Board believes that the continued 

investment of the past few years in the technology portfolio will not only deliver growth in future years but also contribute significantly to the long 

term success as the synergistic benefits of the Group’s combined technologies begin to accrue. The Board remains confident in the long term growth 

prospects of the markets in which the Group operates. 

Revenue is assumed to grow by a compound annual growth rate of .% during the five year forecast period from – (: .% forecast 

period –). The assumed terminal growth rate after is % per annum (: %). 

Gross margins are assumed to be broadly maintained at historic levels (: same basis). An increase in EBITDA margins are forecast from % to % 

in later years as greater operational gearing is achieved and investment in R&D peaks. 

Discount rate 

Future cash flows of each CGU are discounted at a pre-tax rate of .% per annum (: .% for each CGU). The discount rates are based 

on a weighted average cost of capital (WACC) for the Group as adjusted for risk. The WACC is derived by taking the average of the results using 

the Capital Asset Pricing Model (CAPM) and dividend growth model using market data.


16 Intangible assets continued 

Sensitivity to changes in assumptions 

The value in use analysis in the base case scenario, the assumptions for which are outlined above, indicated that there remains significant headroom 

in relation to the valuation of goodwill (: significant headroom). 

The Board has historically pursued a market growth investment strategy. To underpin this strategy the management team regularly appraises the 

Group’s performance against budgets and targets and is therefore able to accelerate or reduce investment profiles according to market conditions. 

Recognising the possibility that current pressures in the Group’s principal markets continue for longer than currently assumed in the base case scenario, 

the Board has modelled a sensitised scenario which reflects no growth in and five year compound annual growth rate – of .%. 

In this scenario the reduced revenue growth is mitigated by cost reduction measures and lower levels of product development and global 

infrastructure investment. In the opinion of the Board whilst the revised headroom is reduced in this scenario there remains significant 

headroom (: significant headroom). 

The overall assessment is most sensitive to changes in the assumed revenue growth and EBITDA margins. 

Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable changes to key 

assumptions would result in an impairment of goodwill. 

The amount of goodwill that is tax deductible is £nil (: £nil). 

17 Investments 

Group 

Non-current assets 

Investments – Flatfrog Laboratories A.B. at cost 2,939 2,939 

Impairment charge recognised in the year (2,939) — 

Net book value at 31 December — 2,939 

During the year the Group assessed the fair value of its investment in Flatfrog Laboratories as £nil. Therefore the Group has recognised an exceptional 

impairment charge of £,,. As at December , the Group’s holding in the ordinary shares of the company has reduced to .% 

(: .%). 

The Company has the following interests in subsidiary undertakings: 

Company 

At January 89,434 — 

Additions — 88,292 

Additions in respect of share-based payments 657 1,142 

Net book value at 31 December 90,091 89,434 

The undertakings in which the Company’s interest at the period end is more than % are listed in note . 

18 Derivative financial assets 

Group 

Current assets 

Financial assets designated at fair value through profit and loss 356 59 

356 59 


£000 


£000 


£000 

 

£ 

 

£ 

 

£ 



The Group’s exposure to credit, currency and interest rate risks related to other investments is disclosed in note . 

The Company had no derivative financial assets as at either December or December .

80 





19 Deferred tax assets and liabilities 

Recognised deferred tax assets and liabilities 

Deferred tax assets and liabilities are attributable to the following: 

Assets Liabilities Net 

Group 


£000 

 

£ 


£000 

 

£ 


£000 

 

£ 

Property, plant and equipment 516 739 (684) (286) (168) 453 

Intangible assets — — (3,380) (3,977) (3,380) (3,977) 

Financial assets at fair value through profit or loss — 18 (69) — (69) 18 

Inventories 2,260 3,291 — — 2,260 3,291 

Lease rentals 68 73 — — 68 73 

Provisions — 103 — — — 103 

Other items 1,133 708 (130) (130) 1,003 578 

Tax loss carry forwards 687 896 — — 687 896 

Tax assets/(liabilities) 4,664 5,828 (4,263) (4,393) 401 1,435 

Set off of tax (2,577) (2,968) 2,577 2,968 — — 

Net tax assets/(liabilities) 2,087 2,860 (1,686) (1,425) 401 1,435 

Movement in temporary differences during the year 

Group 

Balance at 

January 

 

£ 

Recognised 

in profit 

or loss 

£ 

On 

acquisition 

£ 

Recognised 

in equity 

£ 

Balance at 

December 

 

£ 

Recognised 

in profit 

or loss 

£ 

Recognised 

in equity 

£ 

Balance at 

31 December 


£000 

Property, plant and equipment 285 168 — — 453 (621) — (168) 

Intangible assets (1,896) (330) (1,751) — (3,977) 597 — (3,380) 

Financial assets at fair value through 

profit or loss 9 9 — — 18 (87) — (69) 

Derivatives/hedging instruments 52 — — (52) — — — — 

Inventories — 3,291 — — 3,291 (1,031) — 2,260 

Loans and borrowings 3,449 (3,449) — — — — — — 

Lease rentals 83 (10) — — 73 (5) — 68 

Provisions 5 98 — — 103 (103) — — 

Other items 297 244 — 37 578 536 (111) 1,003 

Tax loss carry forwards 660 (556) 792 — 896 (209) — 687 

2,944 (535) (959) (15) 1,435 (923) (111) 401


19 Deferred tax assets and liabilities continued 

Unrecognised deferred tax assets and liabilities 

Deferred tax assets have not been recognised in respect of the following deductible temporary differences and unused tax losses (stated gross): 

Group 

Tax losses 3,687 3,299 

Deductible temporary differences 793 793 

4,480 4,092 

The unrecognised deferred tax in respect of tax losses primarily relates to the Group’s foreign subsidiaries. 

Neither the remaining tax losses nor the deductible temporary differences expire under current tax legislation. Deferred tax assets have not been 

recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the 

benefits therefrom. 

At December a deferred tax liability for temporary differences of £,, (: £,,) relating to an investment in a subsidiary 

was not recognised (: £nil) because the Company controls whether the liability will be incurred and is satisfied that it will not be incurred in the 

foreseeable future. 

The Group has no other unrecognised deferred tax assets or liabilities. 

The Company has no unrecognised deferred tax assets or liabilities. 

20 Inventories 

Group 

Raw materials and consumables 498 459 

Work in progress 159 226 

Finished goods 17,580 19,131 

18,237 19,816 

Inventories recognised as an expense during the year amounted to £,, (: £,,). 

Write-down of inventories during the year amounted to £, (: £,,). 

21 Trade and other receivables 

Group 


£000 

Group 

 

£ 


£000 


£000 

Company 


£000 

 

£ 

 

£ 

Company 

 

£ 

Trade receivables 32,332 27,818 — — 

Other receivables 4,506 2,596 — — 

Prepayments 2,781 2,374 206 270 

Amounts due from Group entities — — 55,760 45,761 

39,619 32,788 55,966 46,031 

Non-current — — — — 

Current 39,619 32,788 55,966 46,031 

39,619 32,788 55,966 46,031 



The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in note .

82 





22 Cash and cash equivalents 

Group 


£000 

Group 

 

£ 

Company 


£000 

Company 

 

£ 

Bank balances 13,802 14,506 111 — 

Highly liquid investments 8,000 — — — 

21,802 14,506 111 — 

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note . 

23 Capital and reserves 

Reconciliation of movement in capital and reserves 

Group 

Share 

capital 

£ 

Share 

premium 

£ 

Capital 

reserve 

£ 

Translation 

reserve 

£ 

Hedging 

reserve 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

Balance at January 4,785 — — 3,614 (132) (20,346) (12,079) 

Total recognised income and expenses — — — 1,040 132 15,080 16,252 

Share-based payments (net of tax) — — — — — 1,179 1,179 


Conversion of preference shares and 

loan notes 2,716 100,781 — — — — 103,497 

Exchange of Chalkfree Limited shares 

for Promethean World Plc shares 6,791 (6,791) — — — — — 

Effect of Group reconstruction — (93,990) 93,990 — — — — 

Issue of ordinary shares (net of fees) 5,708 99,796 — — — — 105,504 

Balance at 31 December 2010 20,000 99,796 93,990 4,654 — (6,177) 212,263 

Balance at January 20,000 99,796 93,990 4,654 — (6,177) 212,263 

Total recognised income and expenses — — — 873 — 11,172 12,045 

Purchase of own shares by Employee Benefit Trust — — — — — (889) (889) 


Share-based payments (net of tax) — — — — — 547 547 

Balance at 31 December 2011 20,000 99,796 93,990 5,527 — 364 219,677 

Company 

Share 

capital 

£ 

Share 

premium 

£ 

Retained 

earnings 

£ 

Total 

equity 

£ 

Shares issued at par on incorporation 50 — — 50 

Further shares issued at par for the share for share exchange with Chalkfree Limited shareholders 14,242 — — 14,242 

Shares issued on IPO (net of fees) 5,708 99,796 — 105,504 

Total recognised income and expenses — — 9,952 9,952 


Share-based payments — — 1,142 1,142 

Balance at 31 December 2010 20,000 99,796 9,004 128,800 

Balance at January 20,000 99,796 9,004 128,800 

Total recognised income and expenses — — 9,936 9,936 

Purchase of own shares by Employee Benefit Trust — — (889) (889) 


Share-based payments — — 657 657 

Balance at 31 December 2011 20,000 99,796 14,419 134,215


23 Capital and reserves continued 

Share capital 

Ordinary 

shares 

Promethean 

World Plc 


Ordinary 

shares 



 

Ordinary 

shares 

Chalkfree 

Limited 

 

Redeemable 

Preference 

shares 

Chalkfree 

Limited 

 

In thousands of shares 

In issue at January 200,000 — 47,849 54,062 

Chalkfree Limited shares issued to redeem preference shares, accrued 

preference dividends and loan notes — — 27,159 (54,062) 

200,000 — 75,008 — 

Share for share exchange — 142,919 (75,008) — 

Issue of Promethean World Plc shares on IPO — 57,081 — — 

Share capital, of the ultimate parent company, in issue at December 200,000 200,000 — — 

. At December , Chalkfree Limited was the ultimate parent company of the Group. 

. In March , the shareholders of Chalkfree Limited exchanged their shareholdings for ordinary shares in Promethean World Plc; as a consequence Promethean World Plc 

acquired Chalkfree Limited and its subsidiaries and became the ultimate parent company. 

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 ). At December the EBT held ,, shares in the Company 

(: , shares). During the year ,, shares were purchased by the EBT at a cost of £, (: nil). 

During the year, no shares (: nil) were repurchased and subsequently cancelled. 

Share incentive scheme 

Details of share incentive schemes in existence at December are disclosed in note . 

Capital reserve 

The capital reserve arose as a result of the Group reorganisation in , where Promethean World Plc acquired the entire ordinary share capital 

of Chalkfree Limited by share for share exchange. 

Translation reserve (FCTR) 

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well 

as from the translation of assets relating to the Company’s net investment in foreign subsidiaries. 

Hedging reserve 

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged 

transactions that have not yet occurred. As at December the Group had no hedged transactions. 



84 





24 Earnings per share 

Basic earnings per share 

The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders as disclosed below and a weighted average 

number of ordinary shares outstanding, calculated as follows: 

Profit attributable to ordinary shareholders 

Profit for the year attributable to ordinary shareholders 11,172 15,080 

Weighted average number of ordinary shares 


£000 

 

£ 


In thousands of shares 

Issued ordinary shares at January 200,000 47,849 

Effect of Chalkfree Limited shares issued in the period — 21,951 

Retrospective adjustment to exchange each Chalkfree ordinary share for . shares 

in Promethean World Plc — 63,195 

Issue of new shares in Promethean World Plc — 45,196 

Less: weighted average Promethean World Plc shares held by the EBT (709) (758) 

Effect of dilutive vested share options not yet exercised 504 — 

Weighted average number of ordinary shares at December 199,795 177,433 

Basic earnings per share (pence) 5.59 8.50 

. As at January , Chalkfree Limited was the ultimate parent company and had ,, ordinary shares in issue. 

Further details of the shares issued by both Chalkfree Limited and Promethean World Plc are outlined in note . 

Diluted earnings per share 

The calculation of diluted earnings per share at December was based on profit attributable to ordinary shareholders as disclosed below 

and a weighted average number of ordinary shares outstanding calculated as follows: 


Group 

£000 

Profit attributable to ordinary shareholders (basic and diluted) 11,172 15,080 

Weighted average number of shares (basic) 199,795 177,433 

Effect of conversion of Promethean World Plc share options 1,881 2,881 

Weighted average number of shares (diluted) 201,676 180,314 

Diluted earnings per share (pence) 5.54 8.36 

Details of share options granted during the period can be found in note . 

At December , ,, (: ,) share options were excluded from the diluted weighted average number of ordinary shares as their 

effect would have been anti-dilutive. 

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for 

the period during which the options were outstanding. 

 

£


25 Trade and other payables 

Group 


£000 

Group 

 

£ 

Company 


£000 

Company 

 

£ 

Current 

Trade payables 13,840 12,310 — — 

Trade payables due to related parties — 120 — — 

Non-trade payables and accrued expenses 14,085 12,806 — — 

Deferred revenue 4,916 1,396 — — 

Other payables due to Group companies — — 11,953 6,665 

32,841 26,632 11,953 6,665 

Non-current 

Operating lease liabilities 37 55 — — 

Other payables — 193 — — 

Deferred consideration — 615 — — 

37 863 — — 

26 Provisions 

Group 

As at 

January 

 

£ 

Created 

in the 

year 

£ 

Utilised in 

the year 

£ 

Released in 

the year 

£ 

Exchange 

£ 

Fair value 

adjustment 

£ 

As at 

31 December 


£000 

Warranty 1,959 1,709 (1,075) — — — 2,593 2,593 — 

Contingent consideration 1,493 — — (1,282) (2) 244 453 453 — 

Reorganisation provisions 

Restructuring 705 1,755 (2,142) — — — 318 318 — 

Onerous lease 430 500 (113) — — — 817 590 227 

Provisions 4,587 3,964 (3,330) (1,282) (2) 244 4,181 3,954 227 

Group 

As at 

January 

 

£ 

Created 

in the 

year 

£ 

Utilised in 

the year 

£ 

Exchange 

£ 

Fair value 

adjustment 

£ 

As at 

December 

 

£ 

Warranty 1,884 938 (863) — — 1,959 1,959 — 

Contingent consideration — 1,400 — (4) 97 1,493 — 1,493 

Reorganisation provisions 

Restructuring — 1,311 (606) — — 705 705 — 

Onerous lease — 430 — — — 430 90 340 

Provisions 1,884 4,079 (1,469) (4) 97 4,587 2,754 1,833 

. Fair value adjustments are included within finance income and finance expense (see note ). 

Current 

£ 

Current 

£ 

Noncurrent 

£ 

Noncurrent 

£ 



Warranty 

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. 

The timing and frequency of product failures are inherently uncertain and for this reason the warranty provision has been disclosed as current.

86 





26 Provisions continued 

Contingent consideration 

As described in note , the consideration payable for the acquisition of SynapticMash Inc. included a contingent element of up to $.m with $.m 

ultimately payable in January . 

In accordance with IFRS () Business Combinations, this provision was discounted to its present value on the date of acquisition. The fair value 

adjustment is charged to finance expenses in the income statement. 

Reorganisation 

As detailed in note the Group has incurred reorganisation costs following the restructuring of aspects of its business. Provisions have been created 

for redundancy costs and for the onerous lease on its current headquarters. 

Onerous lease 

As described in note the onerous lease provision created in the year of £.m arises from the relocation of the Group’s head office premises. The Group’s 

provision created in relates to the exit from another UK office premises. 

Approximate outflows from these leases are £.m in , £.m in and £.m in . 

27 Employee benefits 

The Group contributes to a number of defined contribution pension schemes providing benefits based upon the contributions made. The assets of the 

schemes are held separately from those of the Group in independently administered funds. The pension charge for the year represents contributions 

payable by the Group to the schemes and amounted to £,, (: £,,). There were no outstanding or prepaid contributions at either 

the beginning or end of each financial year. 

28 Share-based payments 

Description of share schemes 

The Group has in place the following Long term Incentive Plans (LTIPs): 

Share option schemes: 

· Chalkfree Limited Unapproved Company Share Option Plan (Chalkfree CSOP); 

· IPO Option Plan (IPO Plan); 

· Promethean Company Share Option Plan (PRW CSOP); and 

· Promethean Performance Share Plan (PSP). 

Share award schemes: 

· Restricted Share Awards (RSA); 

· Performance Share Awards (PSA); and 

· Charlier Conditional Share Award (CCSA). 

A summary of each of these LTIP schemes is provided below. Only the PRW CSOP and the PSP are now available for the grant of further awards 

to employees. The remaining arrangements relate to pre-IPO awards or, in the case of the IPO Plan, awards made in connection with the IPO, 

and no further awards will be made under these arrangements.


28 Share-based payments continued 

Share option schemes 

Chalkfree Limited Unapproved Company Share Option Plan (Chalkfree CSOP) 

The vesting conditions of the Chalkfree CSOP options are consistent with the PSA, as described below. The vesting conditions of the 

Chalkfree CSOP options follow the same principles as the Chalkfree CSOP options, but with three annual performance targets based on Group 

EBITDA for the financial years ending December , and . 

IPO Option Plan (IPO Plan) 

The IPO Plan provided for a one-off grant, to eligible employees, of options to acquire shares in the Company at a nil exercise price. IPO options are 

now fully vested and remain exercisable for up to five years from the date of admission (subject to continuing employment) and will then lapse. 


The Promethean Company Share Option Plan (PRW CSOP) 

The PRW CSOP provides for the grant, to eligible employees, of options to acquire shares in the Company at an exercise price which may not be less 

than the market value of a share on the date of grant (or economically equivalent rights in jurisdictions in which for legal, regulatory or tax reasons this 

is more appropriate). All employees (including Executive Directors) of the Group are eligible to participate in the PRW CSOP at the discretion of the 

Remuneration Committee. More details of the PRW CSOP are included in the Directors’ Remuneration Report on page . 

The Promethean Performance Share Plan (PSP) 

The PSP was adopted by shareholders at the general meeting on July . The PSP provides for the grant, to eligible employees, of options to 

acquire shares in Promethean World Plc normally at a nil or nominal exercise price (or economically equivalent rights in jurisdictions in which for legal, 

regulatory or tax reasons this is more appropriate). 

Description of share-based payments 

On July , ,, PRW CSOP share options with an exercise price of .p per share were granted. On or around the same date, 

,, share options were granted under the PSP, of which , were granted as share appreciation rights to be settled in cash on exercise. 

As at December , the number of unexercised options were as follows: 

Grant date 

Employees entitled 

Number of 

instruments 

(s) 

Contractual 

life of 

options 

August ( Chalkfree CSOP) Key employees 861 10 years 

August ( Chalkfree CSOP) Key employees 840 10 years 

November ( Chalkfree CSOP) Key employees 11 10 years 

November ( Chalkfree CSOP) Key employees 194 10 years 

April (IPO Plan) Staff 3 189 5 years 

September (PRW CSOP) Key employees 232 10 years 

July (PSP) Key employees 4,5 3,633 3 years 

July (PRW CSOP) Key employees 4,5 3,411 10 years 

9,371 

. The grant dates listed are the execution dates that the terms of the grants were communicated to employees. 

. In the case of the IPO Plan the expiry date is five years from the date of the Company’s admission to the London Stock Exchange. The options may lapse in the event 

of an employee leaving the business. 

. Employees, subject to service conditions, not included in other share incentive schemes. 

. A shorter contractual period applies to certain awards held by US participants, due to local tax implications. 

. Including executive directors as disclosed in the Directors’ Remuneration Report. 


88 






Terms and conditions of the share option programme 

The terms and conditions of the Chalkfree CSOP options and IPO Plan options are disclosed on page . 

The PSP options granted in to the CFO and SMT are subject to performance conditions based on the Company’s Adjusted Basic earnings per 

share, as set out in more detail in the Directors’ Remuneration Report. The awards will not typically be capable of vesting before the third anniversary 

of the date of grant. PSP options granted to other employees are not subject to performance conditions and vest on a time basis over three years from 

the date of grant. 

The PRW CSOP share options granted to the CFO and SMT in will vest subject to the conditions set out in detail in the Directors’ 

Remuneration Report. The PRW CSOP options granted to other employees were granted as new joiner awards and will vest on the third anniversary 

of the date of grant, subject only to continuing employment. 

Inputs for measurement of grant date fair values 

The grant date fair values of the share options are measured based on the Black-Scholes model. The expected volatility has been calculated based on 

the median of the Company’s comparator group’s historical share price volatility over a period broadly comparable with the expected life of options. 

The inputs used in measuring the fair value of the share option grants in were as follows: 

PSP 

(granted 

29.7.11) 

PSP 1 

(granted 

29.7.11) 

PRW CSOP 

(granted 

29.7.11) 

PRW CSOP 1 

(granted 

29.7.11) 

Fair value at grant date (pence) 56.0 54.0 23.0 17.0 

Share price at grant date (pence) 59.75 59.75 59.75 59.75 

Exercise price (pence) nil nil 59.75 59.75 

Expected volatility 53% 53% 53% 53% 

Option life (expected) 3.0 years 3.0 years 6.5 years 5.0 years 

Dividend yield 3.6% 3.6% 3.6% 3.6% 

Risk-free interest rate 1.1% 1.1% 2.3% 1.1% 

. options granted to CFO and SMT. 

The inputs used in measuring the fair value of the share option grants in were as follows: 

IPO Plan 

(granted 

..) 

IPO Plan 

(granted 

..) 

PRW CSOP 

(granted 

..) 

Fair value at grant date (pence) 174.13 172.38 44.20 

Share price at grant date (pence) 175.00 175.00 125.00 

Exercise price (pence) nil nil 125.00 

Expected volatility — — 48.4% 

Option life (expected) 5 months 11 months 5.0 years 

Dividend yield 1.5% 1.5% 2.52% 

Risk-free interest rate 0.5% 0.5% 2.231%



Income statement charge 

The share-based payment charge for the year was £, (: £,,) comprising of £, (: £,,) in respect of share 

options, £, (: £,) in respect of share appreciation rights to overseas employees where share option schemes are not practical and 

£, in respect of employer’s taxation. Of the total charge, £, (: £,,) relates to the IPO Plan and has been disclosed within 

exceptional costs. 

Disclosure of movements in share options 

The number and weighted average exercise prices of share options are as follows: 

Options in 

issue as at 

January 

 

(s) 

Grants 

in the 

year 

(s) 

Exercised/ 

lapsed in 

year 

(s) 

Options in 

issue as at 

31 December 


(000s) 

Option 

price per 

share 

(pence) 

Weighted 

average share 

price at date 

of exercise 

(pence) 

Weighted 

average 

contractual 

life remaining 

(years) 

Chalkfree CSOP 927 — (55) 872 5.25 54.4 7.6 

Chalkfree CSOP 1,326 — (292) 1,034 5.25 54.3 7.7 

IPO Plan 502 — (313) 189 — 61.6 3.2 

PRW CSOP – grant 232 — — 232 125.00 n/a 8.8 

PSP — 3,633 — 3,633 — n/a 2.8 

PRW CSOP – grant — 3,411 — 3,411 59.75 n/a 9.8 

Total options 2,987 7,044 (660) 9,371 n/a n/a 6.5 

Chalkfree 

Options in 

issue as at 

January 

 

(s) 

Conversion 

into 



options 

(s) 

Grants 

in the 

year 

(s) 

Exercised/ 

lapsed in 

year 

(s) 

Options in 

issue as at 

31 December 

2010 

(000s) 

Option 

price per 

share 

(pence) 

Weighted 

average share 

price at date 

of exercise 

(pence) 

Weighted 

average 

contractual 

life remaining 

(years) 

Chalkfree CSOP 650 589 — (312) 927 5.25 166 8.6 

Chalkfree CSOP 843 763 — (280) 1,326 5.25 — 8.7 

IPO Plan — — 769 (267) 502 — 116 4.2 

PRW CSOP — — 232 — 232 125.00 — 9.8 

Total options 1,493 1,352 1,001 (859) 2,987 n/a n/a 8.0 



90 






Share award schemes 

Restricted Share Awards (RSA) 

The Executive Directors and a number of senior employees had, in prior years, acquired ordinary shares in Chalkfree Limited at p per share. 

The Restricted Shares vest on a monthly basis over a four or in some cases a five-year period. These shares will normally be forfeited on cessation 

of employment. 

Performance Share Awards (PSA) 

In August , certain senior employees including the Chief Financial Officer subscribed for awards of ordinary shares in Chalkfree Limited at p 

per share. Each eligible employee holds two awards of shares, a award and a award. The vesting conditions for these awards are described 

in the Directors’ Remuneration Report. The shares are subject to contractual restrictions on transfer until they have vested. If the shares do not vest 

(or normally on cessation of employment), the employees will not receive any economic benefit from these awards. 

PSA 

Under the award the Base Shares vest in three equal tranches at April , April and April and the Superior Shares will vest 

on April subject to the satisfaction of EBITDA performance targets for the three financial years ending December . 

PSA 

Under the award the Base and the Superior Shares will vest on April subject to the satisfaction of a cumulative EBITDA performance 

measured over the whole of the three financial years ending December . 

Charlier Conditional Share Award (CCSA) 

The shares under the CCSA were acquired by Mrs Alexandra Charlier, wife of the Chief Executive Officer, from certain of the Cann family trusts prior 

to the IPO. Vesting conditions of the CCSA are outlined in the Directors’ Remuneration Report on page . 

Fair value 

The awards were settled at fair value and all awards were subscribed and settled in full at the date of grant. 

In the opinion of the Directors, the share price at the date of grant was no more than par value, therefore no IFRS Share-based Payment charge has 

been reflected in the income statement. 

Disclosure of the movements in share awards 

The number of share awards outstanding in was as follows: 

RSA 

shares 

(s) 

PSA 

shares 

(s) 

CCSA 

shares 

(s) 

Total 

LTIP 

shares 

(s) 

Chalkfree Limited share awards at January 1,388 992 1,000 3,380 

Conversion into Promethean World Plc shares 1,256 899 905 3,060 

Vested in the year (1,449) (297) — (1,746) 

Promethean World Plc share awards at January 1,195 1,594 1,905 4,694 

Vested in the year (1,172) (202) — (1,374) 

LTIP share awards as at 31 December 2011 23 1,392 1,905 3,320


29 Financial instruments 

Credit risk 

Exposure to credit risk 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: 

Financial assets at fair value through profit or loss 356 59 

Trade receivables 32,332 27,818 

Other receivables 4,506 2,596 

Cash and cash equivalents 21,802 14,506 

Group 


£000 

Group 

 

£ 


58,996 44,979 

The Company had no financial assets exposed to credit risk at either December or December . 

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: 

Group 


£000 

 

£ 



32,332 27,818 

The maximum exposure to credit risk for trade receivables at the reporting date by type of counterparty was: 

Group 

Wholesale customers 32,288 27,586 

Local authorities/schools and colleges 44 232 

32,332 27,818 

Impairment losses 

The ageing of trade receivables at the reporting date that were not impaired was as follows: 

Group 

Not past due 26,396 23,820 

Past due – days 3,689 2,372 

Past due – days 2,247 1,402 

Past due more than days — 224 

32,332 27,818 

The movement in the allowance for impairment in respect of trade receivables during the year was as follows: 

Group 

Balance at January 413 1,355 

Impairment loss recognised 108 323 

Amounts written off (57) (1,265) 


£000 


£000 


£000 

 

£ 

 

£ 

 

£ 


Balance at December 464 413 

As outlined in note , the Group manages credit risk by allocating customers a credit limit and ensuring the Group’s exposure is within this limit. 

This approach is strengthened with the use of credit insurance when management considers it to be appropriate. The credit insurance policy does 

not require any collateral to be held as security. Accordingly management considers the current level of impairment provision in respect of trade 

receivables appropriate. No individually material trade receivables have been impaired either in the current or previous financial year.

92 





29 Financial instruments continued 

Liquidity risk 

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 

2011 Group 

Carrying 

amount 

£ 

Contractual 

cash flows 

£ 

months 

or less 

£ 

– 

months 

£ 

– 

years 

£ 

– 

years 

£ 

More than 

years 

£ 

Non-derivative financial liabilities 

Trade and other payables 27,962 27,962 27,925 — 37 — — 

Derivative financial liabilities 

Foreign exchange contracts 83 83 47 36 — — — 

28,045 28,045 27,972 36 37 — — 

. Excludes deferred revenue. 

2010 Group 

Carrying 

amount 

£ 

Contractual 

cash flows 

£ 

months 

or less 

£ 

– 

months 

£ 

– 

years 

£ 

– 

years 

£ 

More than 

years 

£ 

Non-derivative financial liabilities 

Trade and other payables 25,484 25,484 25,236 — 211 37 — 

Deferred consideration 615 646 — — 646 — — 

Derivative financial liabilities 

Foreign exchange contracts 128 128 59 69 — — — 

26,227 26,258 25,295 69 857 37 — 


At both December and December , no derivatives were designated as cash flow hedges. 

At both December and December , the Company had no trade and other payables. 

Currency risk 

Exposure to currency risk 

The Group’s exposure to foreign currency risk in respect of the current assets and liabilities per the statement of financial position and forward foreign 

exchange contracts was as follows, based on notional amounts (all amounts are expressed in thousands): 


Group GBP USD Euro CNY GBP USD Euro CNY 

Trade receivables 1,689 37,046 8,305 — 1,238 30,564 7,869 — 

Trade payables (2,052) (11,953) (630) (34,890) (2,395) (12,577) (1,017) (10,393) 

Gross statement of financial 

position exposure (363) 25,093 7,675 (34,890) (1,157) 17,987 6,852 (10,393) 

Forward exchange 

contracts buy/(sell) 12,350 (5,000) (10,500) — 18,014 (10,000) (13,500) — 

Net exposure 11,987 20,093 (2,825) (34,890) 16,857 7,987 (6,648) (10,393)



Currency risk continued 

Exposure to currency risk continued 

The following significant exchange rates applied during the year: 

Average rate 

Reporting date spot rate 

2011 2011 

USD 1.6097 1.5343 1.5456 1.5471 

Euro 1.1546 1.1735 1.1936 1.1675 

CNY 10.3663 10.3775 9.8372 10.2289 

Sensitivity analysis 

The table below details the Group’s sensitivity to a % strengthening in Sterling against the relevant foreign currencies. A % sensitivity has been 

used in and as it is considered a reasonable approximation of the range in which Sterling may fluctuate against the USD and Euro. 

The sensitivity analysis includes outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a % 

change in foreign currency rates. The sensitivity analysis also includes the impact on the Group results of translating the closing net assets of foreign 

entities with a % movement in foreign currency rates and a % (average) movement on their earnings. The calculation also takes account of the 

effect on foreign currency revenues, purchases, assets and liabilities of the Group’s UK legal entities. 

This analysis assumes that all other variables, in particular interest rates, remain constant. 

Equity Profit/(loss) 

Group 

£ 

£ 

31 December 2011 

USD (3,268) (300) 

Euro (909) (102) 

CNY (1,621) (146) 

31 December 2010 

USD (2,306) 955 

Euro (181) 644 

CNY (1,282) (70) 

A % weakening of GBP against the above currencies at December would have had the equal but opposite effect on the above currencies to the 

amounts shown above, on the basis that all other variables remain constant. 

In management’s opinion the sensitivity analysis is unrepresentative of the inherent foreign exchange risk, as the year end exposure does not reflect 

the exposure during the year. US Dollar and Euro denominated sales are seasonal which results in a reduction in US Dollar and Euro receivables 

at the year end. 

Interest rate risk 

At December and December , the Group had no interest-bearing financial liabilities. 

Fair value sensitivity analysis for fixed rate instruments 

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate 

derivatives as hedging instruments under a fair value hedge accounting model. 

Following the repayment of the Group’s hedged bank loans in March , the Group terminated its interest rate swap agreement. No further 

interest rate hedging arrangements have been entered into since. 



94 






Interest rate risk continued 

Cash flow sensitivity analysis for variable rate instruments 

A change of basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown 

below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. 

Profit or loss 

Equity 

Group 

bp 

increase 

£ 

bp 

decrease 

£ 

bp 

increase 

£ 

bp 

decrease 

£ 


Variable rate instruments 218 (170) 218 (170) 

Cash flow sensitivity (net) 218 (170) 218 (170) 

 

Variable rate instruments 145 (77) 145 (77) 

Cash flow sensitivity (net) 145 (77) 145 (77) 

Fair values 

Fair values versus carrying amounts 

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: 

Group 

Carrying 

amount 

£000 


Fair 

value 

£000 

Carrying 

amount 

£ 

Trade and other receivables 36,838 36,838 30,414 30,414 

Cash and cash equivalents 21,802 21,802 14,506 14,506 

Forward exchange contracts – assets 356 356 59 59 

Forward exchange contracts – liabilities (83) (83) (128) (128) 

Trade and other payables – current (27,925) (27,925) (25,236) (25,236) 

Trade and other payables – non-current (37) (37) (863) (863) 

30,951 30,951 18,752 18,752 

. Excludes prepayments. 


The basis for determining fair values is disclosed in note . 

Fair value hierarchy 

The Group classifies the methodology by which it fair values its financial instruments as one of the following different levels: 

· Level : quoted prices (unadjusted) in active markets for identical assets or liabilities; 

· Level : inputs other than quoted prices included within Level that are observable for the asset or liability, either directly (i.e. as prices) or indirectly 

(i.e. derived from prices); and 

· Level : inputs for the asset or liability that are not based on observable market data (unobservable inputs). 

All the Group’s financial instruments at fair value, with the exception of contingent consideration, are valued in accordance with the Level methodology. 

Fair 

value 

£


30 Operating leases 

The total remaining rentals payable under non-cancellable operating leases are as follows: 

Group 

In less than one year 2,279 1,924 

Between one and five years 3,380 3,114 

In more than five years 105 30 

5,764 5,068 


£000 

 

£ 


Operating lease rentals expensed in the statement of comprehensive income were as follows: 

Group 


£000 

 

£ 

Operating lease charge 2,435 2,413 

The Group has operating lease contracts in place for buildings, equipment hire and vehicles. 

The buildings leases cover many of the sites in the UK and also business premises in the US, China, France and Germany and sales offices in Hong Kong, 

Australia, Bahrain and Singapore. The duration of these leases does not exceed ten years. 

Operating leases in respect of vehicles generally have a three-year term. 

Operating lease terms in respect of equipment typically range between three and five years. 

31 Capital commitments 

At December , the Group had capital commitments of £, (: £,). These commitments are expected to be settled in the 

following financial year. 

The Company had no capital commitments as at either December or December . 

32 Related parties 

Transactions with key management personnel 

Loans to Directors 

At December and December , 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 plan on their behalf. 

Key management personnel compensation comprised: 

Group 


£000 

 

£ 

Short-term employee benefits 5,096 4,132 

Post-employment benefits 161 134 

Share-based payments 206 4 

5,463 4,270 

Key management includes both Executive and Non-Executive Board Directors and other members of the Group’s Senior Management Team. In , 

there were key management (: ). 


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.

96 





32 Related parties continued 

Transactions with key management personnel continued 

Key management personnel and Director transactions continued 

The aggregate value of transactions and outstanding balances relating to these related party transactions were as follows: 

Transaction value 

sale/(purchase) 

Balance outstanding 

debtor/(creditor) 

Group 

Year ended 


£000 

Year ended 

 

£ 

Year ended 


£000 

Year ended 

 

£ 

Whitebirk Finance Limited (120) (120) — (120) 

Whitebirk Finance Limited, a company owned by Tony Cann, owns and leases Promethean House to the Group. 

As outlined in note , the Group is in the process of relocating its Blackburn headquarters and registered office to a new site in Lancashire. As part 

of the relocation process, in December the Group entered into heads of terms with Whitebirk Finance Limited to vacate Promethean House. 

Pursuant to the heads of terms, on February the Group entered into a deed of variation with Whitebirk Finance Limited. In consideration 

for a payment of £, the landlord agreed that the lease term be shortened to a revised term compatible with the relocation timetable and 

in consideration for a payment of £, that all dilapidation liabilities will be settled in full. 

The Company’s Sponsor, J.P. Morgan Cazenove, has written to the UKLA pursuant to LR.. and confirmed to UKLA that in their opinion 

as Sponsor, the transaction is fair and reasonable to the interests of all shareholders. 

Independent advice was sought by the Group from Knight Frank LLP as to the reasonableness of the amount and terms agreed. 

Other Group related party transactions 

In the ordinary course of business, goods are manufactured in China and supplied to the UK for sale on 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 either the capital contribution of £m or the amounts due from Group entities. 

Dividends received from subsidiaries were £m in the year (: £m), of which £,, was paid in the year (: £,, paid in the year). 

33 Group entities 

Significant subsidiaries as at 31 December 2011 

Subsidiary undertaking 

Country of 

registration Principal activity Class and percentage of shares held 

Chalkfree Limited England and Wales Holding company Ordinary £0.10 shares 100% 

Promethean (Holdings) Limited England and Wales Holding company Ordinary £1 shares 100% 

Promethean Limited England and Wales Distributor of electronic equipment Ordinary £1 shares 100% 

Promethean GmbH Germany Distributor of electronic equipment Ordinary €1 shares 100% 

Promethean SAS France Distributor of electronic equipment Ordinary €1,193 shares 100% 

Promethean Inc. USA Distributor of electronic equipment Ordinary $0.01 shares 100% 

Promethean Technology 

(Shenzhen) Limited 

China 

Manufacturer and distributor 

of electronic equipment Ordinary shares 100% 

Promethean World Inc. USA Non-trading Ordinary $0.001 shares 100% 

Promethean Technology Limited 

(formerly Promethean 

World Limited) England and Wales Non-trading Ordinary £1 shares 100% 

. Dormant companies. 

With the exception of Chalkfree Limited all of the above are indirect holdings. 

All of the above undertakings are included within the consolidated results.

Visit us online 

We are committed to communicating with all stakeholders. 

For more on Promethean’s business and services visit our corporate 

website where further information is available. This website includes 

our corporate and financial announcements and results presentations. 

www.prometheanworld.com

Promethean World Plc 

Promethean House 

Lower Philips Road 

Blackburn 

Lancashire 

BB TH 

Tel: + () 

www.prometheanworld.com

Promethean World Plc Annual Report and Accounts 2011

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