It’s good to be able to report a few positive messages from Promethean World’s results after a string of depressing announcements from the education-focused systems provider over the last couple of years (see Promethean rough ride continues and work back). So, the good news is that, having reduced its operating cost base by 31.5% compared to H112, the Group has managed to bring its adjusted EBITDA into positive territory at £2.5m vs. a loss of £0.3m in H112. And the cash balance has improved and stands at £9.1m. In more good news, the rate of revenue decline is not as bad as in 2012!
The bad news is that revenue has continued to decline: another double digit percentage fall (of 15.8%) to £70m in the half to 30th June 2013. Both the volume of interactive display systems sold and their average selling price (ASP) declined (by 7.7% and 3.1% respectively). And the volume of 'learner response systems and assessment' fell by 32.5% while the corresponding ASP fell by 27%. Market conditions have not improved and there’s no sign of them doing so; education budgets across the world remain constrained. And this is not just a convenient excuse for poor performance, as evidenced by independent research (highlighted in the release) showing that, despite this performance, Promethean’s global share (excluding China and Turkey) of the interactive display systems market has actually marginally increased.
Although the share price is down nearly 10% in trading today (to 15p), over the month of July Promethean’s shares gained 32% (see Share Indices July 2013), likely off the back of it securing a new £25m banking facility early in the month. Promethean continues to invest by widening its portfolio of solutions and pursuing its strategy to help schools connect the range of disparate devices now in use. But it doesn’t expect to see the benefits of these investments reflected in its results until 2014. And any improvement will clearly have to come from taking market share from competitors. Investors will have to hold onto their hats for a bit longer yet.