TIDMPSL
RNS Number : 9331Y
Photonstar LED Group PLC
23 May 2016
23 May 2016
PhotonStar LED Group Plc
Full year results
PhotonStar LED Group Plc (AIM: PSL, "PhotonStar" or "the
Group"), the British designer and manufacturer of smart LED
lighting solutions, announces its preliminary audited results for
the year ended 31 December 2015.
Highlights
-- Revenue fell 4% to GBP6.90m (2014: GBP7.19m)
-- Gross profit fell 6% to GBP2.49m (2014: GBP2.66m)
-- Adjusted EBITDA* loss reduced by 73% to GBP0.24m loss (2014: loss GBP0.88m)
-- Reported loss before tax of GBP3.03m (2014: loss GBP1.57m)
-- Basic loss per share at lower at 1.9p (2014: basic loss per share 1.1p)
-- Net debt of GBP0.84m (2014: Net debt of GBP0.41m)
-- Exceptional non-cash charge of GBP1.98m (2014: GBPNil)
relating primarily to goodwill impairment
* 'Adjusted EBITDA' is defined as EBITDA before share option
charge and exceptional items.
Operational highlights in 2015
-- Major progress transitioning to Internet of Things (IoT)
retrofit connected lighting and building management business with
over 200 Halcyon(TM) systems deployed
-- Initial development of Halcyon(TM) now largely complete;
current and future development work concentrating on improvements
to Halcyon(TM) and the expansion of cloud services
-- Fixed cost base for the business now substantially reduced
-- Extended collaboration with IBM Watson IoT including
partnership around IBM's cloud platform Bluemix
o Membership of IBM Partner World program, providing access to
IBM technology and capabilities
o Completed Halcyon(TM) retrofit of IBM Mobile and IoT lab at
Hursley laboratory in Hampshire
Post year end
-- Halcyon(TM) selected by RBS as a part of its Go Green
initiative resulting in a trial of Halcyon(TM) in Trinity House,
the RBS commercial office building in Bristol
-- Secure commissioning patent granted
o Targeted at IoT lighting, sensors, actuators and other devices
employed where security vulnerabilities must be safeguarded
-- Participated in IBM Interconnect in February 2016 and
previewed cloudBMS(TM) , which delivers IoT Building Management
System as a Service (BMaaS(TM) )
-- Raised GBP1.00m (before expenses) of additional capital in
March 2016 to further expand the Halcyon(TM) software and services
offering
James McKenzie, CEO of PhotonStar, said:
"In 2015, we made good progress in transitioning into becoming a
retrofit connected lighting and building management business, with
over 200 Halcyon(TM) systems deployed.
"The traditional lighting business, however, was affected by
significant competitor price reductions, resulting in a slight
decline in revenues and increased pressure on profit margins.
"The development of Halcyon(TM) is largely complete and we are
now focusing on improvements and new solutions to meet growing
demand for smart buildings.
"The Group entered 2016 as a much stronger business, with a
significantly reduced cost base and a clear market
opportunity."
For further information:
+44 (0)2381
PhotonStar LED Group Plc (www.photonstarled.com) 230381
James McKenzie - Group Chief Executive
+44 (0)20 7600
finnCap 1658
Adrian Hargrave/ Giles Rolls (Corporate
Finance)
Mia Gardner (Corporate Broking)
+44 (0)20 3861
Northland Capital Partners 6625
Patrick Claridge/David Hignell
(Corporate Finance)
John Howes/Rob Rees (Corporate
Broking)
+44 (0)20 7457
Instinctif Partners 2020
Kay Larsen/Chantal Woolcock
About PhotonStar LED Group Plc
PhotonStar LED Group Plc is a leading British designer and
manufacturer of intelligent lighting & building control
solutions. The Group's proprietary technology Halcyon(TM) is a
scalable, secure wireless IoT platform for retrofit into commercial
buildings, for energy reduction, asset monitoring & control,
and real time environmental, behavioral and energy insights.
PhotonStar is based in Romsey, Hampshire with a manufacturing
facility in Wales.
Overview
The Group had a mixed year during 2015 with, on the one hand,
good progress in the further development of the Halcyon(TM) product
range and ensuring that a wide cross section of industries are
represented in its initial trial installations, whilst on the other
the more traditional, fixed white (non- colour tuneable) lighting
business suffering from significant competitor price reductions,
which resulted in a slight decline in revenues and increased
pressure on profit margins.
PhotonStar remains heavily focused on further expanding its
Halcyon(TM) product range and to use this range to transition into
a Group that increasingly focuses on being a retrofit connected
lighting and building management business, which offers us the
potential to address a broad range of significant future business
opportunities and markets.
Halcyon(TM) is an "intelligent" circadian wireless lighting
system with wireless lamps, fixtures and controllers that use
behavioral, environmental and energy data from wireless sensors or
Internet of Things (IoT) devices to intelligently deliver the right
light at the right time, whilst gathering valuable data. The
ability of the system to gather and report real time data has
created significant interest from a wide range of industry sectors
which regard this ability as a key part of their future needs
requirements.
In December 2015 the Group announced that it was extending its
collaboration with IBM around their IBM Watson IoT. In particular,
the Group will team with IBM to further build on its partnership
around IBM's cloud platform, Bluemix.
PhotonStar demonstrated its Halcyon intelligent wireless
lighting system operating with the IBM Watson IoT Cloud platform
and IBM Bluemix to IBM's clients and partners at IBM's Global
Watson IoT headquarters in Munich, Germany.
PhotonStar also joined the IBM Partner World program, which
provides business partners access to IBM technology and
capabilities which will enable the Group's Halcyon(TM) wireless
intelligent lighting system to build the next best innovations
jointly with IBM in the IoT space.
In early 2015 PhotonStar completed a full retrofit of its
Halcyon(TM) lighting system into the IBM Mobile and IoT Lab at
their world renowned Hursley laboratory in Hampshire, England. The
lab hosts many clients interested in using IoT within their
industries and the installation is being used to demonstrate IBM
cloud solutions operating with Halcyon(TM) as an end to end
commercial IoT solution. This important test site for the
Halcyon(TM) system was followed up throughout the year with further
building installations in a wide cross section of industry sectors,
including hospitals, mental health care homes, hotels, offices and
student accommodation.
PhotonStar is however mindful that these installed test sites
should be sufficient reference sites for customers with smaller
building estates and so anticipate being able to create additional
sales opportunities from them.
In terms of sales of the Halcyon(TM) system the Group made
excellent progress during 2015 with over 200 systems deployed,
which generated gross revenues at list price of approximately
GBP400,000, and revenues net of promotional discounts of about
GBP300,000 (2014: GBP5,000).
The Board is pleased with the on-going collaboration with IBM
and anticipates that this will lead to some further project work
with IBM and/or its partners in 2016. This started at the beginning
of the year with the test installation at IBM's Hursley House
offices, then developed into a demonstration of the Halcyon(TM)
intelligent wireless lighting system operating with the IBM Watson
IoT Cloud platform to IBM(R) clients and partners at IBM's Global
Watson IoT Headquarters in Munich, Germany.
This collaboration with IBM has now developed to such an extent
that PhotonStar was also invited to the IBM Interconnect in
February 2016, where PhotonStar previewed its cloudBMS(TM) , a new
cloud based solution that delivers an IoT Building Management
System as a Service (BMaaS(TM) ). The new solution is built on the
second generation of its low cost retrofittable wireless monitoring
and control platform, halcyonPRO2(TM) .
The new halcyonPRO2(TM) adds regulation of heating and cooling,
shading and power management to the proven lighting control and
environmental sensor network already in use in the first
Halcyon(TM) product. cloudBMS(TM) , halcyonPRO2(TM) and cloud based
analytics combine to deliver an extremely capable, scalable and
secure BMaaS(TM) solution at a price point and low entry cost that
enables owners of small to medium sized businesses to reduce energy
and operating costs and realise new insights into their
operations.
PhotonStar also demonstrated the automated shading solution
feature of halcyonPRO2(TM) at the event. The solution taps into the
IBM Watson IoT Platform, taking environmental and occupancy data
from the Halcyon(TM) sensor network, geolocation information per
room and real time weather and forecast data from The Weather
Company, an IBM Business, to optimise window shade use to deliver
maximum energy savings thus reducing HVAC costs by intelligently
using or preventing solar heat gain and optimizing thermal,
daylight and visual comfort for building occupants. PhotonStar
demonstrated with IBM the retrofittable asset monitoring feature of
halcyonPRO2(TM) and cloudBMS(TM) , providing device health and key
asset performance indicator information seamlessly to IBMs Maximo
asset management package.
The combination of the retrofittable hardware and sensor inputs,
cloud analytics, visualisation and the connectivity options to
asset management software will lower operating expenses for owners
of multiple facilities by reducing manual compliance tests, manual
monitoring and inspection of assets, and enable smart predictive
and preventative maintenance.
Halcyon(TM) has been cited and commended for several awards
including the Lux Awards 2015, the Energy Awards in 2015, the
Lighting Design Awards 2015, IET awards, Building and Efficiency
awards, edie awards and the Environment & Energy Awards 2015
winning the Technology Innovator 2015 awards for smart
lighting.
The initial development of Halcyon(TM) is now largely complete
with current and future development work concentrating on
improvements to Halcyon(TM) and the expansion of cloud
services.
The smart lighting market is expected to grow to USD 8.14
Billion by 2020, at a CAGR of 22.07% between 2015 and 2020 (Source:
Markets and Markets 2016). Smart lighting is a system of luminaries
and electronic control systems designed to accelerate energy
savings and maintain an intelligent lighting ecosystem. Smart
lighting is an advance technology that makes the use of intelligent
lighting control systems to control light based on various
parameters, namely, occupancy, movement, color temperature, and
amount of natural light. The smart lighting broadly comprises two
components, namely, luminaries and control & communication
components.
Post Year End
In early 2016, Halcyon(TM) was selected by the Royal Bank of
Scotland Group plc ("RBS"), the international banking and financial
services company, building as a part of its Go Green initiative
which provides innovators and SMEs with the opportunity to trial
innovative resource efficiency solutions in Trinity House, the RBS
commercial office building in Bristol. The trial is being funded by
RBS as part of its initiative to source innovative solutions to
address a range of environmental challenges. PhotonStar will be
installing its intelligent wireless lighting control and energy
monitoring system, Halcyon(TM) , to help reduce the energy
consumption and environmental impact of the office building.
On 25 February 2016 it was announced that the Group had
conditionally raised gross proceeds of GBP1.00m (before expenses)
by way of a placing of 38,000,000 ordinary shares of 1p each and a
subscription of 2,000,000 ordinary shares of 1p each at a price of
2.5p per share. The funds raised will be used for working capital,
software and product expansion and Halcyon(TM) channel and brand
development.
The Board welcomes the new shareholders and thanks existing
shareholders for their continued support to the Company. The net
funds raised will be used to capitalise on the significant
investment that has already been made into the Company and will, it
is anticipated, transform PhotonStar into a retrofit connected
lighting and building management business with hardware sales and a
recurring revenue base. Management hope that the stronger balance
sheet will underpin the Company's future growth.
Sales for the first quarter of 2016 are broadly in line with
management expectations with the traditional businesses continuing
to see increased pressure on revenue and profit margins but with
the new business, the Halcyon Cloud BMS, enjoying continued success
in winning trial installations. The Board sees that the Group's
future growth will be driven by a combination of hardware sales and
services in lighting, heating, cooling, ventilation and critical
asset monitoring.
Business review
LED fixtures business
Traditional lighting
The LED fixtures business, selling predominantly fixed white
light LED luminaires, saw increasing competition and price
pressures and as a result sales decreased by 3% to GBP6.71m (2014:
GBP6.93m). However, significant cost savings made in the second
half of 2014 continued through 2015. As a result, adjusted EBITDA
for the main Lighting Fixtures division was positive in the second
half of 2015.
The lighting market continues to transition towards LED
lighting, with colour-tuneable and Circadian LED lighting becoming
a significant subsector. The market in Europe alone is estimated to
be worth up to EUR2.3bn per year by 2020 (Source: Lighting Europe
2013, 'Human Centric Lighting').
During the year PhotonStar launched an expanded range of its
fixed white light LED fixture products. The new EcoStar and Piran
wholesale range (launched in Q4 2014) now has a fixture efficiency
range between 80lm/W and 95lm/W at a reduced cost.
House builder sales exceeded forecast in 2015. The Group
benefits from an exclusive contract with a leading UK house
builder, initially announced in late 2012 and expected to be
renewed shortly.
Halcyon system
Excellent progress has been achieved on the next generation
Halcyon(TM) system with over 200 lighting systems deployed in 2015,
with notable installs in offices, healthcare, houses and hotels,
and generated gross revenues at list price of approximately
GBP400,000, and revenues net of promotional discounts of about
GBP300,000 (2014: GBP5,000). Additionally in 2015 the LuxLoop
product range was expanded to include LuxLoop sunpipe. This product
was developed in conjunction with Monodraft and it was shortlisted
in the FX awards. It is expected that the Luxloop product family
will result in a strong specification pipeline in 2016.
The Group was awarded in March 2015 an Innovate UK grant of
GBP0.12m for a project titled 'Smart In-building Micro-Grid for
Energy Management' that will deliver future energy management
solutions for buildings.
The Company has trials lined up for its cloudBMS(TM) product,
the company's building management as a service software and
hardware solution aimed at the retrofit market. The Board
anticipates that the Group's future revenue growth will be driven
by a combination of hardware sales and services in lighting,
heating, cooling, ventilation and critical asset monitoring. It is
expected that as the systems are installed the service revenue
component will strengthen the Group's gross margin.
Camtronics Vale Ltd
One of the Group subsidiaries, Camtronics Vale Limited,
undertakes critical LED and electronic assembly operations for the
Group's manufacture of its lighting fixtures. Camtronics Vale also
contracts electronics manufacturing for some third party customers.
In July 2015, Camtronics Vale secured a supply contract with a
UK-based electronics company for the manufacture of a high value
sophisticated consumer product at its factory in Tredegar, South
Wales. The Group had anticipated 2015 revenues from this project of
GBP0.5m, helping to underpin original 2015 forecasts. Unfortunately
this project ran into technical difficulties, which were outside of
the Group's control. The customer's parent company went into
receivership, as announced in November 2015, and the Group incurred
bad debts of GBP0.06m.
LED light engines business
The light engines business also experienced a slow-down in sales
and pressure on margins. Sales decreased 25% to GBP0.20m (2014:
GBP0.26m). As previously reported in 2015 the Group does not commit
any speculative development resources to this area of the business
and now requires development work to be commercially funded by
customers. The Board believes that focusing resources on expanding
the Halcyon(TM) product range offers a greater return on
investment.
Financial review
Group sales decreased by 4% to GBP6.90m (2014: GBP7.19m),
reflecting a small decline in LED fixture sales to GBP6.70m (2014:
GBP6.92m). LED light engine sales contributed a total of GBP0.20m
to 2015 sales (2014: GBP0.26m).
Gross margin overall slightly reduced to 36.0% (2014: 37.0%).
The larger LED fixtures division saw slightly lower margins of
36.9% (2014: 38.4%) and the much smaller LED light engines division
saw increased margins of 15.3% (2014: 3.1%).
The significant reduction in net operating expenses in 2015
reflects the major cost-reduction focus in the second half of
2014.
Non-cash costs (depreciation, amortisation and share based
charges), included in net operating expenses, increased from
GBP0.65m in 2014 to GBP0.77m in 2015, reflecting the higher levels
of investment in capitalised development costs in recent years.
As a result of the change in strategic direction by the Company
towards transitioning into a Group that increasingly focuses on
being a retrofit connected lighting and building management
business, the Board has reviewed, in conjunction with the annual
review of goodwill required by accounting standards, the value of
certain historic assets on the balance sheet but which are related
to non-strategic areas of the Group.
The result of this review is that the Board has concluded that
there should be a non-cash impairment charge to the balance sheet
which totals, in aggregate, GBP1.98m (2014: GBPNil). The majority
of this impairment charge, GBP1.63m, relates to the remaining
goodwill on the balance sheet from the reverse transaction with
Enfis in 2010 and which the Board has concluded should be written
off entirely.
In addition, the capitalised costs of the development of the
Chip on Board Light Engines, the capitalised research and
development costs of the earliest version of ChromaWhite
('Chromawhite 1.0') is being written off and the value of some
stock the Group continues to hold and which relates to the early
development of a retail version of Halcyon has been impaired. The
Board believes that this impairment charge, which is a non-cash
charge through the consolidated statement of comprehensive income,
is an appropriate action to take in order to ensure that the value
of the assets included on the balance sheet remains relevant to the
business that is being built.
The Group's pre-tax loss before exceptional item for the year
was significantly reduced to GBP1.04m (2014: loss of GBP1.57m). The
Group's pre-tax loss after exceptional item (see Note 6) was
GBP3.03m (2014: loss of GBP1.57m). Basic and the diluted loss per
share were up to 1.9p (2014: 1.1p). The Group has tax losses of
approximately GBP9.30m available to set against future taxable
trading profits.
During 2015, the Group made capital expenditure of GBP0.81m, of
which GBP0.76m was spent on research and development of its LED
lighting fixtures and light engines, and GBP0.05m on plant and
equipment.
In 2015 the Group started drawing on the grant from Innovate UK
(the new name for the government's Technology Strategy Board),
worth a total of GBP0.12m over 2015 and 2016, that was made
available to support the Group's development of the 'Smart
In-building Micro-Grid for Energy Management' project.
Current Trading and Outlook
The Group is seeing a rapid transition towards LED lighting
across the market but with strong price pressures in fixed white
lighting products. This is driven by cost reductions, increased
efficiency and multiple regulatory drivers, including the
Europe-wide ban on incandescent lamps and the code for sustainable
homes.
However, with its investment in new technology and manufacturing
processes, PhotonStar is well positioned to take advantage of this
fast-growing market and the next phase of lighting development. The
Halcyon(TM) system has been specifically designed to address the
market opportunity for dimmable white, retrofit colour-tuneable and
Circadian lighting. It is also the Group's first IoT platform, able
to be controlled by multiple users using smart devices.
The Board is pleased with the Group's on-going collaboration
with IBM and anticipates that this will lead to further project
work with IBM and/or its partners in 2016.
In March 2016 PhotonStar raised GBP1.0m of additional capital by
an issue of shares to further expand the Halcyon(TM) software and
services offering into the wider retrofit building management
opportunity and provide additional working capital for the
Group.
The Group enters 2016 as a much stronger business, with a stable
management team in place and a significantly reduced cost base. The
development of Halcyon(TM) is now largely complete with current and
future development work concentrating on improvements, new
solutions and markets for Halcyon(TM) .
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
----------------------------------- --------- ---------
Revenue 6,901 7,188
Cost of sales (4,416) (4,528)
------------------------------------ --------- ---------
Gross profit 2,485 2,660
Administrative expenses (3,567) (4,286)
Other income 74 91
------------------------------------ --------- ---------
Operating loss before exceptional
item (1,008) (1,535)
Exceptional item (1,983) -
----------------------------------- --------- ---------
Operating loss after exceptional
item (2,991) (1,535)
Financial expense (34) (37)
Loss before income tax (3,025) (1,572)
Income tax credit 258 240
Loss and total comprehensive
income for the year attributable
to the equity shareholders
of the parent (2,767) (1,332)
------------------------------------ --------- ---------
Loss per ordinary share
(pence) attributable to
the
equity shareholders of the
parent
Basic and diluted (1.9p) (1.1p)
------------------------------------ --------- ---------
Consolidated Statement of Financial Position
As at 31 December 2015
2015 2014
GBP'000 GBP'000
---------------------------------- -------- --------
Non-current assets
Property, plant and equipment 214 339
Intangible assets 1,811 3,452
----------------------------------- -------- --------
2,025 3,791
Current assets
Inventories 874 1,184
Trade and other receivables 1,637 1,574
Current tax assets 360 166
Cash and cash equivalents 197 1,137
----------------------------------- -------- --------
3,068 4,061
---------------------------------- -------- --------
Total assets 5,093 7,852
----------------------------------- -------- --------
Equity
Capital and reserves attributable
to equity holders of the
company
Ordinary shares 1,477 1,438
Share premium 7,271 7,188
Share capital reduction
reserve 10,081 10,081
Share option reserve 599 596
Reverse acquisition reserve (8,843) (8,843)
Accumulated losses (8,180) (5,413)
----------------------------------- -------- --------
Total equity 2,405 5,047
----------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables
and deferred income 1,595 2,034
Borrowings 1,042 725
Provisions 36 31
2,673 2,790
---------------------------------- -------- --------
Non-current liabilities
Deferred tax liabilities 15 15
Total liabilities 2,688 2,805
----------------------------------- -------- --------
Total equity and liabilities 5,093 7,852
----------------------------------- -------- --------
Consolidated Statement of Cash Flows for the year ended 31
December 2015
2015 2014
GBP'000 GBP'000
------------------------------------- -------- --------
Cash flows from operating
activities
Loss before tax (3,025) (1,572)
Exceptional item - impairment 1,983 -
Depreciation 133 169
Amortisation 584 410
Movement in share option
reserve 3 72
Movement in provisions 5 (14)
Grant income (74) (91)
Receipt of grants 41 157
Change in inventories 185 112
Change in trade & other receivables (63) 258
Change in trade & other payables (406) (163)
-------------------------------------- -------- --------
Cash used in operations (634) (662)
Tax received 64 136
-------------------------------------- -------- --------
Net cash used in operating
activities (570) (526)
-------------------------------------- -------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment (51) (65)
Purchase of intangible assets (758) (711)
-------------------------------------- -------- --------
Net cash used in investing
activities (809) (776)
-------------------------------------- -------- --------
Cash flows from financing
activities
Proceeds from the issue of
ordinary shares 122 2,072
Cost of reducing share capital - (34)
New bank facilities 872 -
Repayment of previous bank
facilities (872) -
Change in borrowings 317 (202)
-------------------------------------- -------- --------
Net cash generated from financing
activities 439 1,836
-------------------------------------- -------- --------
Net (decrease)/increase in
cash and cash equivalents (940) 534
Cash and cash equivalents
at the start of the year 1,137 603
-------------------------------------- -------- --------
Cash and cash equivalents
at the end of the year 197 1,137
-------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2015
Share
Ordinary capital Share Reverse
share Share reduction option acquisition Retained
capital premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- ----------- --------- ------------- --------- --------
Balance at
1 January 2014 11,239 5,430 - 524 (8,843) (4,081) 4,269
------------------ --------- --------- ----------- --------- ------------- --------- --------
Share capital
reduction (10,115) - 10,081 - - - (34)
Issue of new
shares 314 1,758 - - - - 2,072
Share option
charge - - - 72 - - 72
Loss and total
comprehensive
income for
the year - - - - - (1,332) (1,332)
Balance at
31 December
2014 1,438 7,188 10,081 596 (8,843) (5,413) 5,047
------------------ --------- --------- ----------- --------- ------------- --------- --------
Issue of new
shares 39 83 - - - - 122
Change in share
option reserve - - - 3 - - 3
Loss and total
comprehensive
income for
the year - - - - - (2,767) (2,767)
Balance at
31 December
2015 1,477 7,271 10,081 599 (8,843) (8,180) 2,405
------------------ --------- --------- ----------- --------- ------------- --------- --------
1. GENERAL INFORMATION
PhotonStar LED Group ("the Group") comprises PhotonStar LED
Group PLC ("the Company") and its subsidiary undertakings. The
Company is a public limited liability company incorporated and
domiciled in the United Kingdom. The Company's registered number is
06133765 (England and Wales) and its registered office is at Unit 8
Westlink, Belbins Business Park, Cupernham Lane, Romsey SO51 7JF.
This announcement was approved by the Board of Directors for issue
on 20 May 2016.
2. FINANCIAL INFORMATION
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS"), as adopted in the European Union and as applied in
accordance with the provisions of the Companies Act 2006. On 20 May
2016 the consolidated financial statements and this final audited
results announcement were authorised for issue in accordance with a
resolution of the directors and will be delivered to the Registrar
of Companies following the Company's Annual General Meeting.
Statutory accounts for the year ended 31 December 2014 have been
filed with the Registrar of Companies. The auditor's reports on the
financial statements for the years ended 31 December 2015 and 31
December 2014 are unqualified and do not contain any statement
under Section 498 (2) or (3) of the Companies Act 2006. The
auditor's reports on the 31 December 2015 and 31 December 2014
financial statements contain an emphasis of matter statement with
respect to going concern given the dependence of the Group on
achieving its anticipated growth in sales and meeting its cash flow
forecasts. The auditor's report on the 31 December 2014 financial
statements contains an emphasis of matter statement with respect to
the carrying value of goodwill as at 31 December 2014 given the
dependence on the anticipated sales growth.
The annual financial information presented in this final audited
results announcement for the year ended 31 December 2015 is based,
and is consistent with, that in the Group's audited financial
statements for the year ended 31 December 2015. This audited
results announcement does not constitute statutory accounts of the
Group within the meaning of Section 435 of the Companies Act 2006.
Whilst the information included in this audited results
announcement has been prepared in accordance with the recognition
and measurement criteria of IFRS, this announcement does not in
itself contain sufficient information to comply with IFRS.
3. GOING CONCERN
The directors have adopted the going concern basis in preparing
the financial statements for the year to 31 December 2015. In
reaching this conclusion, the directors have considered for both
the Company and the Group, current trading and the current and
projected funding position for the period of just over 12 months
from the date of approval of the financial statements through to 31
May 2017.
Current funding
The Group's cash balance as at 31 December 2015 was GBP197,000
and the drawdown of borrowing was GBP1,041,000 against bank
facilities at that date of GBP1,650,000. Since then the Group has
continued to execute its business plan by:
o investing in the continuing growth of its Lighting fixtures
business and the development of new product ranges;
o continued further investment in expanding its Halcyon range;
and
o continued transformation of the Group into a retrofit
connected lighting and building management business through its
Halcyon and CloudBMS platforms.
In order to progress these plans after the year end, in March
2016 new shares were issued in the Company for a consideration of
GBP1,000,000.
Projected funding
Subject to the continued growth in Halcyon(TM) sales, the cash
flow projections show that the Group can continue to operate for a
period of 12 months from the date the financial statements were
signed.
The achievement of these projections is subject to uncertainties
described below.
The projections include assumptions on the amount and timing of
revenue and gross margin that the Group expects to achieve during
the period of the projections. These assumptions are subject to
both market and other uncertainties, as discussed in the Chief
Executive Officer's Statement and the Strategic Report.
The Group has incurred a net loss of GBP2,767,000 in the year
(2014: GBP1,332,000) and has been loss making since incorporation.
The projections reflect the directors' expectation that the Group
will be monthly adjusted EBITDA (as calculated in Note 7) positive
in 2016. To the extent there is a shortfall in revenue and/or gross
margin, it is likely to be at least partially offset by a reduction
in working capital requirements. Nevertheless, the ability of the
Company and the Group to continue as going concerns is dependent on
the ability of the Group to achieve the growth in sales of its
products projected by the directors in their current forecasts.
Growth needs to be sufficient for the Company and the Group to be
able to operate within their cash resource and borrowing
facilities.
Conclusion
It is acknowledged that the achievement of these projections is
subject to market and other uncertainties and consequently there is
a material uncertainty which may cast significant doubt about the
Group's and Company's ability to continue as going concerns.
Nevertheless, after taking account of the Group's current funding
position, its cash flow projections and the risks and uncertainties
associated with these, the directors have a reasonable expectation
that the Group and Company have access to adequate resources to
continue in operational existence for the foreseeable future. For
these reasons they continue to prepare the financial statements on
a going concern basis. These financial statements do not include
any adjustments that would result from the going concern basis of
preparation being inappropriate.
4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in preparing the financial
information were the same as applied in preparing the Company's
statutory accounts for the year ended 31 December 2014 in
accordance with International Financial Reporting Standards as
adopted by the EU.
5. EARNINGS PER SHARE
Basic loss per share 2015 2014
Loss attributable to ordinary GBP(2,767,000) GBP(1,332,000)
shareholders
Weighted average number of
ordinary shares 144,042,465 124,868,624
Basic loss per share (1.9p) (1.1p)
------------------------------- --------------- -----------------
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding after adjusting these amounts
for the effects of dilutive potential ordinary shares.
As the results for the years ended 31 December 2015 and 31
December 2014 are a loss, any exercise of share options would have
an anti-dilutive effect on earnings per share. Consequently
earnings per share and diluted earnings per share are the same and
the calculation has not been included.
As at 31 December 2015, there were share options outstanding
over 17,442,390 shares (2014: 18,671,461 shares), which could
potentially have a dilutive impact in the future.
6. EXCEPIONAL ITEM
2015 2014
GBP'000 GBP'000
----------------------- --------- ---------
Impairment losses 1,983 -
----------------------- --------- ---------
Total exceptional item 1,983 -
----------------------- --------- ---------
As a result of the change in strategic direction by the Company
towards transitioning into a Group that increasingly focuses on
being a retrofit connected lighting and building management
business, the Board reviewed, in conjunction with the annual review
of goodwill, the value of certain historic assets on the balance
sheet but which are related to non-strategic areas of the Group.
The result of this review is that the Board has concluded that
there should be a non-cash impairment charge to the balance sheet
which totals, in aggregate, GBP1,983,000 (2014: GBPNil). The
majority of this impairment charge, GBP1,626,000 relates to the
remaining goodwill on the balance sheet from the reverse
transaction with Enfis in 2010 and which the Board has concluded
should be written off entirely. In addition, the capitalised costs
of the development of the Chip on Board Light Engines, the
capitalised research and development costs of the earliest version
of ChromaWhite ('ChromaWhite 1.0') is being written off and the
value of some stock the Group continues to hold and which relates
to the early development of a retail version of Halcyon has been
impaired. The affected assets are mainly within the LED Lighting
Fixtures reporting segment. The Board believes that this impairment
charge, which is a non-cash charge through the Consolidated
Statement of Comprehensive Income, is an appropriate action to take
in order to ensure that the value of the assets included on the
balance sheet remain relevant to the business that is being
built.
The impairment loss consists of the following:
Group 2015 2014
GBP'000 GBP'000
------------------------------ -------- --------
Goodwill 1,626 -
Capitalised development costs 189 -
Inventories 125 -
Property, Plant and Equipment 43 -
Total impairment loss 1,983 -
------------------------------ -------- --------
7. SEGMENTAL INFORMATION
The directors consider that for the year ended 31 December 2015
the Group has operated in two business segments, LED Lighting
Fixtures and LED Light Engines.
The Group's principal activity consisted of the design,
development, manufacture and sale of LED Lighting Fixtures and of
LED Light Engines, as follows:
Lighting Lighting Light Light Total Total
fixtures fixtures engines engines
2015 2014* 2015 2014* 2015 2014*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- ---------- --------- --------- --------- ---------
UK 5,654 6,353 196 263 5,850 6,616
Rest of
the world 1,051 572 - - 1,051 572
------------------- ---------- ---------- --------- --------- --------- ---------
Total revenue 6,705 6,925 196 263 6,901 7,188
------------------- ---------- ---------- --------- --------- --------- ---------
Adjusted
EBITDA (36) (375) (30) (177) (66) (552)
Depreciation
and amortisation (715) (572) (2) (7) (717) (579)
Interest
expense (34) (37) - - (34) (37)
Income
tax credit 258 240 - - 258 240
Impairment (1,917) - (66) - (1,983) -
Total assets 4,827 6,557 38 151 4,865 6,708
Total liabilities 1,482 1,689 50 127 1,532 1,816
------------------- ---------- ---------- --------- --------- --------- ---------
'Adjusted EBITDA for reportable segments' above is defined as
EBITDA before share option charge and corporate expenses, and
'Adjusted EBITDA' below is defined as EBITDA before share option
charge and exceptional item.
* Prior year figures have been restated to reflect revised
managerial reporting responsibilities
A reconciliation of the adjusted EBITDA to the loss before tax
is as follows:
Total Total
2015 2014*
GBP'000 GBP'000
-------------------------------- --------- ---------
Adjusted EBITDA for reportable
segments (66) (552)
Corporate expense (170) (332)
---------------------------------- --------- ---------
Adjusted EBITDA (236) (884)
Depreciation and amortisation (717) (579)
Share option charge (55) (72)
Interest expense (34) (37)
Exceptional item (Notes 6b and (1,983) -
32)
-------------------------------- --------- ---------
Loss before tax (3,025) (1,572)
---------------------------------- --------- ---------
8. INCOME TAX CREDIT
Group 2015 2014
GBP'000 GBP'000
-------------------------------------------- -------- --------
Current taxation; research and development
tax credits
UK corporation tax on loss for the
year (182) (166)
Adjustment in respect of prior periods (76) (74)
-------------------------------------------- -------- --------
(258) (240)
-------------------------------------------- -------- --------
Deferred tax - -
-------------------------------------------- -------- --------
Income tax credit (258) (240)
-------------------------------------------- -------- --------
9. AVAILABILITY OF DOCUMENT
Copies of this announcement (and the Company's statutory
accounts for the year ended 31 December 2015 when available) may be
obtained from the Company Secretary, PhotonStar LED Group PLC, Unit
8 Westlink, Belbins Business Park, Cupernham Lane, Romsey SO51 7JF.
A copy of the annual report and accounts will be sent to
shareholders shortly.
This announcement can also be viewed on the Group's website:
www.photonstarled.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEWFMSFMSELI
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May 23, 2016 02:00 ET (06:00 GMT)
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