TIDMPEB
RNS Number : 3225S
Pebble Beach Systems Group PLC
25 June 2018
Pebble Beach Systems Group plc
Results for the year ended 31 December 2017
Pebble Beach Systems Group plc, a leading global software
business specialising in solutions for playout automation, and
content serving customers in the broadcast markets, today announces
its final results for the year ended 31 December 2017.
Financial Headlines
2017 2016
------------------------------------- ----------- ------------
Revenue GBP10.3m GBP10.9m
Adjusted* operating profit/(loss) GBP0.5m GBP(1.1)m
- continuing operations
Adjusted* (loss)/earnings per
share) - continuing operations (0.2)p (1.8)p
Operating loss - continuing GBP(2.4)m GBP(1.9)m
operations
Basic (loss)/earnings per share (2.1)p (2.4)p
Net profit/(loss) from discontinued GBP2.9m GBP(52.4)
operations
Net profit/(loss) for the year GBP0.3m GBP(55.3)
Basic (loss)/earnings per share 0.2p (45.0)p
Net debt GBP(10.3)m GBP(14.5)m
Total dividend per share proposed - -
------------------------------------- ----------- ------------
*Adjusted operating profit/(loss), a non-GAAP measure, is
operating profit/(loss) before depreciation, the amortisation and
impairment of goodwill and acquired intangibles, the amortisation
of capitalised development costs, non-recurring items and foreign
exchange gains (see note 4). Adjusted earnings per share is
calculated on the same basis after taking account of related tax
effects.
Headlines
-- Adjusted operating profit for the continuing business of
GBP0.5 million (loss in 2016 GBP(1.1 million))
-- Steady performance of Pebble Beach Systems, despite general
market conditions being challenging during ongoing period of
technology change
-- Overall cost savings of GBP3.6 million from 2017 to 2018,
achieved by the restructure of Pebble Beach Systems operations,
closure of PLC head office, reduced headcount and reduced
professional fees
-- On 22 June 2018 the Company agreed an amendment to the
Revolving Credit and Term Loan Facilities agreement to secure the
facility until 30 November 2019, including a simplification of
banking covenants, enabling it to remain independent and continue
to invest in product development
-- Net debt reduced from GBP14.5 million to GBP10.3 million during the year
-- Sale of hardware division on 2 February 2017 that generated
an adjusted operating loss of GBP7.7 million in 2016
John Varney, Non-Executive Chairman of Pebble Beach Systems
Group plc, said:
"2017 was a transitional year for the Group requiring
significant management effort to complete the disposal of the loss
making hardware division, and bring the Strategic Review process to
a conclusion with a strategy to remain independent and grow the
Group using Pebble Beach Systems Limited ("PBS") as the
foundation.
Two significant keys to remaining independent are the securing
of funding support and a return to positive cash generation. I am
pleased that the necessary actions have been taken; the reduction
of PLC related overheads, post period end operational headcount
reduction and the agreement of new terms with our bank.
As we look forward into 2018, the refocussed Group is now able
to enter a significant period in the industry as market
opportunities created by the changes in the broadcast industry
become clear, and PBS is able to build on its significant customer
momentum.
I would like to thank all of our employees and my Board
colleagues for their ongoing commitment as we head into 2018 and
are now well placed to focus again on building the business to
achieve success."
- ends -
For further information please contact:
John Varney, Non-Executive +44 (0) 75 55
Chairman 59 36 02
Shaun Dobson / James White +44 (0) 20 74
N+1 Singer 96 30 00
The Company is quoted on the LSE AIM market (PEB.L). More
information can be found at www.pebbleplc.com.
About Pebble Beach Systems
Pebble Beach Systems is a world leader in automation, channel in
a box, integrated and virtualised playout technology, with scalable
products designed for highly efficient multichannel transmission as
well as complex news and sports television. Installed in more than
70 countries and with proven systems ranging from single up to over
150 channels in operation, Pebble Beach Systems offers open,
flexible systems, which encompass ingest and playout automation,
and complex file-based workflows. The company trades in the US as
Pebble Broadcast Systems.
Forward-looking statements
Certain statements in this announcement are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to be correct. Because
these statements involve risks and uncertainties, actual results
may differ materially from those expressed or implied by these
forward-looking statements. The Group undertakes no obligation to
update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast.
CHAIRMAN'S STATEMENT
Introduction
2017 has been a year focused on successfully stabilising the
Group following the disposal of the hardware division in Q1.
Pebble Beach Systems is a world leader in automation, channel in
a box, integrated and virtualised playout technology, with scalable
products designed for highly efficient multichannel transmission as
well as complex news and sports television. Installed in more than
70 countries and with proven systems ranging from single up to over
150 channels in operation, Pebble Beach Systems offers open,
flexible systems, which encompass ingest and playout automation,
and complex file-based workflows. The company also trades in the US
as Pebble Broadcast Systems.
Its products are flexible, reliable and scalable, and are
designed to cater for all channel types. Its innovative solutions
manage acquisition, file-based workflows, archiving and
multi-channel playout at large and small installations
worldwide.
Financial Results
Pebble Beach Systems delivered a sound financial performance.
Order intake for the full year of GBP10.5 million is below the
previous year (2016: GBP11.7 million), which is due to an
exceptionally large order received late in 2016, which wasn't
expected to be repeated in 2017. Resultant revenue was GBP10.3
million (2016: GBP10.9 million).
The business has historically high margins which were under
pressure during 2017 as a result of a number of projects being
completed ahead of the Harmonic OEM agreement coming to an end in
March 2018. The number of projects increased as Harmonic looked to
utilise the non-refundable software licences. The margins are
therefore expected to recover in FY18.
Adjusted operating profit was GBP0.5 million in 2017 (loss in
2016: GBP1.1 million) before non-recurring costs of GBP0.5 million,
depreciation and amortisation costs of GBP2.3 million and exchange
losses of GBP0.1 million are deducted. Central costs included were
GBP1.3 million. Headcount reductions made in early FY18 from 78 to
62 will contribute to operating profit improvements in FY18.
In 2017, the Central costs were GBP1.3 million (2016: GBP4.2
million). This decrease is due to GBP0.5 million release of the
Pebble Beach Systems VCP accrual in 2017 (2016: charge of GBP0.7
million), closure of the head office in Hungerford and
consolidation of head office roles with the operating business in
Weybridge. As we look forward to 2018 we expect to see a further
reduction.
Net finance costs remained steady during 2017 reflecting the
Group's paydown of some of its revolving credit facility ("RCF")
and overdraft. The available RCF as at 31 December 2017 was GBP15.0
million (2016: GBP15.0 million) of which GBP11.5 million had been
fully drawn down. Interest paid on the RCF was GBP0.3 million
(2016: GBP0.3 million). In addition, there was an overdraft of
GBP1.0 million (2016: GBP1.0 million) which was not utilised.
Liquidity risk has been reduced with combined secured bank loans
and trade and other payables being reduced by GBP7.3 million from
GBP23.4 million in 2016 to GBP16.3 million at the end of 2017.
The Company continues to view investment in the development of
new products and services as key to future growth. In 2017 Pebble
Beach Systems capitalised GBP0.8 million of development costs
(amortised GBP0.65 million), (2016 GBP1.1 million) (amortised
GBP0.36 million).
Strategic Review and Formal Sale Process ("FSP")
On 23 February 2017, the Company announced that, following the
disposal of VCS, a strategic review and formal sales process (FSP)
had been initiated to consider options available to reduce the
Company's outstanding debt, including the possibility of a sale of
the Group.
During the course of the FSP the Company engaged with a number
of interested parties. These discussions did not result in an offer
which was considered by the Board to reflect the value of the
Group's operations and the Board decided to terminate the FSP.
Going Concern
The directors are required to make an assessment of the Group's
ability to continue to trade as a going concern.
On 2 February 2017 the Group sold the trade and assets of the
hardware division (VCS) to xG Technology Inc., which reduced the
net debt of the Group to GBP12.0 million.
On 14 February 2017, the Group pursued a cost reduction
strategy, resulting in the closure of the Head Office function,
which was then no longer appropriate as the Company had a single
operating subsidiary, Pebble Beach Systems Limited, which operates
from a standalone site. Accordingly, notice was served on the Head
Office team.
During 2017 the Group forecast that it would be in breach of its
banking covenants for the foreseeable future
meaning it was reliant on the ongoing support of its
bankers.
In December 2017 the Company commenced discussion with its
bankers to secure the support required to remain independent.
By 31 December 2017 net debt had been reduced to GBP10.3 million
(net cash GBP1.2 million and bank debt of GBP11.5 million). In
addition, there was an available overdraft of GBP1.0 million which
was not utilised.
In April 2018 the Company announced it had negotiated new heads
of terms which were subject to a revision of the existing
documentation. Today, the Company confirms that the amended
Revolving Credit and Term Loan Facilities agreement has been signed
with Santander UK PLC. The revision secures the facility until 30
November 2019 with simplified banking covenants and a reasonable
repayment schedule.
In reaching their decision that the financial statements should
be prepared on the going concern basis, the Board considered that
the new signed facility with our bankers and their ongoing support
indicates the Group's ability to continue as a going concern.
In order to assess the appropriateness of preparing the
financial statements on a going concern basis, management have
prepared detailed projections of expected cash flows. These
projections include the impact of cost reductions of GBP3.6
million, GBP2.2 million delivered as part of the 2017 PLC cost
reduction strategy and GBP1.4 million through operational costs
savings completed in January 2018 in the Pebble Beach Systems
operation.
As part of the review, the Board considered sensitivities with
regards to the timing of revenue growth coming from the transition
in the broadcast industry from SDI to IP platforms. It looked at
sensitivities regarding the recovery of gross margin following the
completion of the Harmonic OEM. Finally, it considered
sensitivities regarding the cost reductions.
Given that both the margin recovery and cost reductions both
pertained to items already completed prior to sign off of the
accounts, the Board concluded that the primary risk is one of
ongoing trading and therefore the Group remains a going
concern.
xG Technology
As part of the revised business purchase agreement for the sale
of VCS, it was agreed that the Group would retain the right to any
sums received in the future in respect of an outstanding specific
debtor, subject to a maximum sum of $2.0 million. The Group was
reliant on xG Technology Inc. ("xG") fulfilling this contract to
enable the Group to recover this debt.
In April 2017, the Company received $0.25 million in cash from
xG against this debt.
In Q4 2017 xG advised on completion of the contract which was
delaying receipt of the remaining $1.75 million. Following
extensive discussions with xG, who were looking to offset alleged
significant additional costs of completion and other VCS costs that
xG considered should not be borne by it under the original
agreement, the Board announced in December 2017 that there was no
likelihood of agreement between xG and the Group and the collection
of the remaining $1.75 million was unlikely without entering a
protracted legal dispute. Accordingly, this debt has been fully
impaired.
Subsequent to the decision not to pursue the remaining $1.75
million, it has come to light that xG have refused
to meet their legal obligations to clear two historic creditors
totalling $390k, which have been provided for in full in the
accounts.
Dividends
In view of the results for the year, the Board does not
recommend payment of a final dividend for the year ended 31
December 2017.
Board changes
Following the sale of the hardware division in 2017, it was
mutually agreed with the outgoing Executive Chairman, John Hawkins,
that his role had become redundant. The Board wish to thank Mr
Hawkins for his contribution to the restructuring of the Group over
his six years as Executive Chairman.
Following the Board's decision to operate the Company, Pebble
Beach Systems, as an independent entity, two appointments were made
to the Board.
At the beginning of 2018 Peter Mayhead was appointed as Group
Chief Executive Officer.
In addition, as announced on 6 April 2018, the Board appointed
Graham Pitman as Non-Executive Director.
Trading Outlook
The broadcast market continues to be challenging as customers
assess how best to invest in the evolving technologies of IP and
cloud-based infrastructures whilst maintaining their traditional
infrastructure.
The Company is well placed to offer the market a solution which
is able to bridge this transition period and is expected to
maintain its sales performance through FY18 as the pipeline
continues to be steady. At the same time, the Company will deliver
improved profitability as a direct result of the restructure
undertaken throughout 2017 and Q1 2018.
John Varney
Non-Executive Chairman's Statement
For the year ended 31 December 2017
FINANCIAL REVIEW
Divisions and Markets
For the year ended 31 December 2017
Continuing Operations
2017 2016 Change
GBP'm GBP'm %
---------------------------------------- ------- ------- --------
Pebble Beach Systems 10.3 10.9 -5.1%
--------
Total Revenue 10.3 10.9 -5.1%
---------------------------------------- ------- ------- --------
Pebble Beach Systems 1.8 3.1 -44.0%
Central (1.3) (4.2) -70.1%
---------------------------------------- ------- ------- --------
Total adjusted operating profit/(loss) 0.5 (1.1) -146.2%
---------------------------------------- ------- ------- --------
Pebble Beach Systems has contributed GBP10.3 million of revenues
and GBP1.8 million of adjusted operating profit in 2017.
Non-recurring items excluded from adjusted profit are GBP0.6
million charge in respect of rationalisation and redundancy costs,
including GBP0.3 million payment for director's loss of office and
GBP0.1 million gain in respect of disposal of the Group's head
office in Hungerford.
Discontinued Operations
2017 2016 Change
GBP'm GBP'm %
-------------------------------------- ------- ------- --------
Vislink Communication Systems 1.0 31.7 -96.7%
--------
Total Revenue 1.0 31.7 -96.7%
-------------------------------------- ------- ------- --------
Profit/(loss) attributable to equity
shareholders 2.9 (52.4) -149.9%
-------------------------------------- ------- ------- --------
The profit attributable to equity shareholders for discontinued
operations was GBP2.9 million which includes GBP5.1 million from
recycling translation reserve for discontinued operations.
Goodwill impairment
In accordance with the requirements of IAS 36 'Impairment of
assets', goodwill is required to be tested for impairment on an
annual basis, with reference to the value of the cash-generating
units ("CGU") in question. The carrying value of goodwill at 31
December 2017 is GBP3.2 million (2016: GBP3.2 million) and relates
solely to Pebble Beach Systems. There is significant headroom
between the carrying value and the value of the forecast discounted
cash flows.
Non-recurring items
The Group charged GBP2.2 million (2016: GBP0.7 million) of
non-recurring costs to the consolidated income statement. The
charge comprised:
-- GBP0.1 million gain on disposal of the Group's former head office (continuing operations)
-- GBP0.6 million charge in respect of rationalisation and
redundancy costs including a GBP0.3 million termination payment for
director's loss of office (continuing operations)
-- GBP1.3 million loss on disposal of the VCS business,
including GBP1.3 million provision for the $1.75 million debt and
GBP0.3 million for supplier provisions (discontinued
operations)
-- GBP0.2 million charge in respect of capitalised development
costs written off (discontinued operations)
-- GBP0.2 million in respect of disposal/sale costs (discontinued operations)
Cash flows
The Group held cash and cash equivalents of GBP1.2 million at 31
December 2017 (2016: GBP0.5 million). The table below summarises
the cash flows for the year.
GBP'million 2017 2016
------------------------------------ ------- --------------
Cash used in operating activities (2.6) (1.8)
Net cash used in investing
activities 7.1 (4.4)
Net cash from financing activities (3.5) 4.2
Effects of foreign exchange (0.3) (0.8)
------------------------------------ ------- --------------
Net increase/(decrease) in
cash and cash equivalents 0.7 (2.8)
Cash and cash equivalents
at 1 January 0.5 3.3
------------------------------------ ------- --------------
Cash and cash equivalents
at 31 December 1.2 0.5
------------------------------------ ------- --------------
As at 31 December 2017 net debt was GBP10.3 million (cash GBP1.8
million and bank debt of GBP12.1 million). At the end of January
2018, net debt had reduced to GBP9.9 million. The Group was using
GBP11.5 million of its available facilities in December 2017.
On 2 February 2017 the Group sold the trade and assets of the
hardware division (VCS) to xG, which reduced net debt to GBP12.0
million.
Foreign exchange
The principal exchange rates used by the Group in translating
overseas profits and net assets into sterling are set out in the
table below.
Average Average Year end Year end
rate rate rate rate
Rate compared to GBP sterling 2017 2016 2017 2016
------------------------------ ------- ------- -------- --------
US dollar 1.289 1.354 1.351 1.230
------------------------------ ------- ------- -------- --------
Risk management
The Board regularly reviews the full range of business risks
facing the Group. The approach adopted is to identify, evaluate and
manage the likely impact of risk on the Group's business
objectives. Where the risks are unavoidable they are managed
through business controls and where appropriate through insurance
and treasury activities.
The Group has a programme of regular risk assessment, which
incorporates internal control reviews of both a financial and
non-financial nature. A process of continuous review has been in
place throughout the year at an operating company level to consider
the risk environment and the effectiveness of controls. The results
of reviews, initiatives and progress on implementing control
improvements are regularly reported to the Board.
CONSOLIDATED GROUP INCOME STATEMENT
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
Revenue 3 10,320 10,879
Cost of sales (3,831) (2,924)
-------- ---------
Gross profit 6,489 7,955
Sales and marketing expenses (2,351) (3,052)
Research and development expenses (1,762) (1,596)
Administrative expenses (2,718) (4,945)
Foreign exchange gains (95) 1,840
Other expenses (1,931) (2,100)
Operating loss 4 (2,368) (1,898)
------------------------------------------ ------ -------- ---------
Operating loss is analysed as:
Adjusted operating profit/(loss) 500 (1,082)
Depreciation (187) (197)
Amortisation and impairment of
acquired intangibles (1,419) (1,422)
Amortisation of capitalised development
costs (655) (359)
Non-recurring items 3,4 (512) (678)
Exchange (losses)/gains charged/credited
to the income statement (95) 1,840
------------------------------------------ ------ -------- ---------
Finance costs 5 (339) (331)
Finance income 5 4 2
Loss before tax (2,703) (2,227)
Tax 6 95 (729)
-------- ---------
Loss for the year being loss
attributable to owners of the
parent (2,608) (2,956)
Net result from discontinued
operations 2,892 (52,358)
-------- ---------
Net result for the year 284 (55,314)
Earnings per share from continuing
and
discontinued operations attributable
to the owners of
the parent during the year
Basic (loss)/earnings per share
From continuing operations 8 (2.1)p (2.4)p
From discontinuing operations 2.3p (42.6)p
-------- ---------
From loss for the year 0.2p (45.0)p
------------------------------------------ ------ -------- ---------
Diluted (loss)/earnings per share
From continuing operations 8 (2.1)p (2.4)p
From discontinued operations 2.3p (42.6)p
-------- ---------
From loss for the year 0.2p (45.0)p
------------------------------------------ ------ -------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- ---------
Profit/(Loss) for the financial
year 284 (55,314)
Other comprehensive income -
items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of overseas operations
- continuing operations (92) 2,593
- discontinued operations (176) (2,230)
Recycle translation reserve for (5,077) -
discontinued operations
Total loss for the year attributable
to owners of the parent (5,061) (54,951)
--------------------------------------- -------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2017
Capital
Ordinary Share redemption Merger Translation Accumulated
shares premium reserve reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 1 January
2016 3,066 6,800 617 32,448 4,843 6,678 54,452
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Share based payments:
Value of employee
services - - - - - 1,247 1,247
Dividends payable
(note 10) - - - - - (1,829) (1,829)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Transaction with
owners - - - - - (582) (582)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Issued shares 49 - - - - - 49
Retained loss
for the year - - - - - (55,314) (55,314)
Exchange differences
on translation
of overseas operations - - - - 363 - 363
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Total comprehensive
income/expense
for the period 49 - - - 363 (55,314) (54,902)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 31 December
2016 3,115 6,800 617 32,448 5,206 (49,218) (1,032)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 1 January
2017 3,115 6,800 617 32,448 5,206 (49,218) (1,032)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Share based payments:
Value
of employee
services - - - - - 28 28
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Transaction with
owners - - - - - 28 28
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Retained profit
for the year - - - - - 284 284
Transfer - - - (2,670) - 2,670 -
Recycle translation
reserve for discontinued
operations - - - - (5,077) - (5,077)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Exchange differences
on translation
of overseas operations - - - - (268) - (268)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Total comprehensive
income/expense
for the period - - - (2,670) (5,345) 2,982 (5,033)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 31 December
2017 3,115 6,800 617 29.778 (139) (46,236) (6,065)
--------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
2017 2016
Notes GBP'000 GBP'000
------------------------------------ ------ --------- ---------
Assets
Non-current assets
Intangible assets 6,941 8,216
Property, plant and equipment 285 467
Deferred tax assets - -
--------- ---------
7,226 8,683
--------- ---------
Current assets
Inventories 225 206
Trade and other receivables 3,729 5,436
Current tax assets 5 254
Cash and cash equivalents 1,862 2,044
--------- ---------
5,821 7,940
Assets of disposal group and
non-current asset classified
as held for sale - 15,177
--------- ---------
5,821 23,117
--------- ---------
Liabilities
Current liabilities
Financial liabilities - borrowings 1,613 15,000
Trade and other payables 5,588 10,520
Current tax liabilities - -
Provisions for other liabilities
and charges 400 391
--------- ---------
7,601 25,911
Liabilities of disposal group
classified as held for sale - 5,014
7,601 30,925
--------- ---------
Net current (liabilities) (1,780) (7,808)
--------- ---------
Non-current liabilities
Financial liabilities - borrowings 10,500 -
Deferred tax liabilities 644 1,174
Provisions for other liabilities
and charges 367 733
--------- ---------
11,511 1,907
--------- ---------
Net assets (6,065) (1,032)
------------------------------------ ------ --------- ---------
Equity attributable to owners
of the parent
Ordinary shares 10 3,115 3,115
Share premium account 10 6,800 6,800
Capital redemption reserve 10 617 617
Merger reserve 32,448 32,448
Translation reserve (139) 5,206
Retained earnings (46,236) (49,218)
--------- ---------
Total equity (6,065) (1,032)
------------------------------------ ------ --------- ---------
CONSOLIDATED GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
---------------------------------------- ------ --------- ---------
Cash flows from operating activities
Cash generated from operations 9 (2,761) (1,235)
Interest paid (348) (351)
Taxation received/(paid) 528 (174)
--------- ---------
Net cash from operating activities (2,581) (1,760)
--------- ---------
Cash flows from investing activities
Interest received 47 2
Proceeds from sale of property,
plant and equipment 510 80
Proceeds from sale of intangibles 7,493 -
Purchase of property, plant and
equipment (107) (301)
Expenditure on capitalised development
costs (798) (4,261)
Net cash generated from/(used
in) investing activities 7,145 (4,480)
--------- ---------
Cash flows from financing activities
Net new bank loans raised/(repaid) 11 (3,500) 6,000
Dividend paid 11 - (1,829)
Issue / (purchase) of shares - 49
Net cash from / (used in) financing
activities (3,500) 4,220
--------- ---------
Net decrease in cash and cash
equivalents and overdrafts 1,064 (2,020)
Effect of foreign exchange rate
changes 11 (272) (774)
--------- ---------
Cash and cash equivalents and
overdrafts at 1 January 457 3,251
Cash and cash equivalents and
overdrafts at 31 December 1,249 457
--------- ---------
Net debt comprises:
Cash and cash equivalents and
overdrafts 1,249 457
Borrowings (11,500) (15,000)
--------- ---------
Net debt at 31 December 11 (10,251) (14,543)
---------------------------------------- ------ --------- ---------
The cash and cash equivalents and overdrafts balance comprise
credit balances of GBP1,862,000 which have been set off against
debit balances of GBP613,000.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2017
1. GENERAL INFORMATION
The Pebble Beach Systems Group is a leading global software
business specialising in solutions for playout automation, and
content serving customers in the broadcast markets.
The Company is a public limited company and is quoted on the
Alternative Investment Market (AIM) of the London stock exchange.
The Company is incorporated and domiciled in the UK. The address of
its registered office is 12 Horizon Business Village, 1 Brooklands
Road, Weybridge, Surrey, KT13 0TJ.
The registered number of the Company is 04082188.
This final results announcement was approved for issue on 22
June 2018.
2. BASIS OF PREPARATION
The Group financial statements have been prepared on a going
concern basis in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRS), IFRIC
interpretations and the Company Act 2006 applicable to companies
reporting under IFRS.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise judgment in the process of applying
the Group's accounting policies. The areas involving a higher
degree of judgment or complexity, or areas where assumptions and
estimates are significant to the Group financial statements are
disclosed in note 4 of the Group financial statements.
During the current reporting period there were no new standards
or amendments which had a material impact on the net assets of the
Group. In addition, standards or amendments issued but not yet
effective are not expected to have a material impact on the net
assets of the Group.
GOING CONCERN
The directors are required to make an assessment of the Group's
ability to continue to trade as a going concern.
On 2 February 2017 the Group sold the trade and assets of the
hardware division to xG, which reduced the net debt of the Group to
GBP12.0 million.
At 31 December 2017 net debt was GBP10.3 million (net cash
GBP1.8 million and bank debt of GBP12.1 million). In addition,
there was an overdraft of GBP1.0 million which was not
utilised.
During 2017 the Group forecast that it would be in breach of its
banking covenants for the foreseeable future meaning it was reliant
on the ongoing support of its bankers.
Following discussions with its bankers, in late 2017 the Company
successfully reached an agreement with its bank which allowed the
business to continue as an independent entity. Subsequently, in Q1
2018 the Company successfully negotiated new heads of terms,
securing the support the Company needed to remain independent and
continue as an independent entity.
In order to assess the appropriateness of preparing the
financial statements on a going concern basis, management have
prepared detailed projections of expected cash flows and these have
been reviewed by the Board.
In reaching their decision that the financial statements should
be prepared on the going concern basis, the Board considered that
the new head of terms secured with our bankers and their ongoing
support indicates the Group's ability to continue as a going
concern.
3. SEGMENTAL REPORTING
The Group's internal organisational and management structure and
its system of internal financial reporting to the Board of
Directors comprise of Pebble Beach Systems Limited and Central
costs. The chief operating decision-maker has been identified as
the Board.
The Board reviews the Group's internal financial reporting in
order to assess performance and allocate resources. Management have
therefore determined that the operating segments for the Group will
be based on these reports.
The Pebble Beach Systems Limited business is responsible for the
sales and marketing of all Group software products and
services.
The table below shows the analysis of Group external revenue and
operating profit from continuing operations by business
segment.
Pebble Central Total
Beach GBP'000
Systems
-------------------------------------- --------- -------- ---------
Year to 31 December 2017
Broadcast 10,320 - 10.320
Total revenue 10.320 - 10,320
--------- -------- ---------
Adjusted operating profit/(loss) 1,772 (1,272) 500
Depreciation (157) (30) (187)
Amortisation and impairment
of acquired intangibles (1,419) - (1,419)
Amortisation of capitalised
development costs (655) - (655)
Non-recurring items (113) (399) (512)
Exchange (losses)/gains (95) - (95)
Finance costs - (339) (339)
Finance income 73 (69) 4
Loss before taxation (594) (2,109) (2,703)
Taxation 511 (416) 95
Loss for the year being attributable
to owners of the parent (83) (2,525) (2,608)
-------------------------------------- --------- -------- ---------
Year to 31 December 2016
Broadcast 10,879 - 10,879
Total revenue 10,879 - 10,879
--------- -------- ---------
Adjusted operating profit/(loss)
(restated) 3,166 (4,248) (1,082)
Depreciation (175) (22) (197)
Amortisation and impairment
of acquired intangibles (1,422) - (1,422)
Amortisation of capitalised
development costs (359) - (359)
Non-recurring items - (678) (678)
Exchange (losses)/gains (295) 2,135 1,840
Finance costs - (331) (331)
Finance income 69 (67) 2
Profit/(loss) before taxation 984 (3,211) (2,227)
Taxation 342 (1,071) (729)
Profit/(loss) for the year
being profit/(loss) attributable
to owners of the parent 1,326 (4,282) (2,956)
-------------------------------------- --------- -------- ---------
Geographic external revenue analysis
The revenue analysis in the table below is based on the
geographical location of the customer for continuing operations of
the business.
2017 2016
Total Total
GBP'000 GBP'000
---------------- ---------- ----------
By market
UK & Europe 4,655 5,360
North America 1,772 2,032
Latin America 357 1,122
Middle East
and Africa 2,811 2,104
Asia / Pacific 725 261
10,320 10,879
---------------- ---------- ----------
Net assets
The table below summarises the net assets of the Group by
division. Balance sheet reporting is disclosed by the divisional
assets and liabilities of the Group as this is consistent with the
presentation of internal information provided to the Executive
Management Board and the Board of Directors.
2017 2016
GBP'000 GBP'000
----------------------------------------- --------- ---------
By division:
Pebble Beach Systems 8,104 10,240
Central (14,169) (21,435)
Assets of disposal Group held for sale - 15,177
Liabilities for disposal Group held
for sale - (5,014)
(6,065) (1,032)
----------------------------------------- --------- ---------
4. OPERATING LOSS
The following items have been included in arriving at the
operating loss for the continuing business:
2017 2016
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Depreciation of property, plant and
equipment 187 197
Amortisation of acquired intangibles 1,419 1,422
Operating lease rentals 167 437
Exchange losses/(gains) charged/(credited)
to profit and loss 95 (1,840)
Research and development expenditure
expensed in the year which includes: 1,762 1,596
* Amortisation of capitalised development costs 655 359
------------------------------------------------------ --------- ---------
Non-recurring items
The following items are excluded from management's
assessment of profit because by their nature they
could distort the Group's underlying quality of
earnings. They are excluded to reflect performance
in a consistent manner and are in line with how
the business is managed and measured on a day-to-day
basis:
2017 2016
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Rationalisation and Redundancy costs 362 -
Provision for former executive debt 260 -
Gain on sale of head office (110) -
Liquidity advice and other costs - 176
Increase in onerous property provision - 502
512 678
------------------------------------------------------ --------- ---------
5. FINANCE COSTS - NET
2017 2016
GBP'000 GBP'000
--------------------- ---------- ----------
Finance costs (339) (331)
Finance income 4 2
Finance costs - net (335) (329)
--------------------- ---------- ----------
Finance costs represent interest payable on bank borrowings.
Finance income is derived from cash held on deposit.
6. INCOME TAX EXPENSE
2017 2016
GBP'000 GBP'000
--------------------------------- --------- ---------
Current tax
UK corporation tax - (64)
Adjustments in respect of prior
years 169 (67)
--------------------------------- --------- ---------
Total current tax 169 (131)
--------------------------------- --------- ---------
Deferred tax
UK corporation tax (267) 900
Impact of change in tax rate - (40)
Adjustments in respect of prior 3 -
years
--------------------------------- --------- ---------
Total deferred tax (264) 860
--------------------------------- --------- ---------
Total taxation (95) 729
--------------------------------- --------- ---------
The UK corporation tax rate decreased from 20 per cent to 19 per
cent from 1 April 2017. Changes to the UK corporation tax rates
were substantively enacted on 7 September 2016. These include
reductions to the main rate to reduce the rate to 17 per cent from
1 April 2020.
Deferred tax has been provided for at the rate of 17 per cent
(2016: 17 per cent).
7. DIVIDS
In view of the results for the year the directors do not
recommend payment of a final dividend for the year ended 31
December 2017.
8. EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The dilutive shares are those
share options granted to employees where the exercise price is less
than the average market price of the company's ordinary shares
during the year.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
2017 2016
Weighted
Weighted average
average Earnings number Earnings
number per of per
Earnings of shares share Earnings shares share
GBP000 000s pence GBP000 000s pence
---------------------------- --------- ------------ ---------- --------- ---------- ----------
Basic and diluted
loss per share
Loss attributable
to continuing operations (2,608) (2.1)p (2,956) (2.4)p
Profit/(loss) attributable
to discontinued
operations 2,892 2.3p (52,358) (42.6)p
---------------------------- --------- ------------ ---------- --------- ---------- ----------
Basic and diluted
profit/(loss) per
share 284 124,292 0.2p (55,314) 122,804 (45.0)p
---------------------------- --------- ------------ ---------- --------- ---------- ----------
Potential ordinary shares are non-dilutive in the current and
prior years as they would decrease the loss per share from
continuing operations. Accordingly there is no difference between
basic and diluted EPS.
Adjusted earnings
The directors believe that adjusted operating profit, adjusted
profit before tax, adjusted earnings and adjusted earnings per
share provide additional useful information on underlying trends to
shareholders. These measures are used by management for internal
performance analysis and incentive compensation arrangements. The
term "adjusted" is not a defined term used under IFRS and may not
therefore be comparable with similarly titled profit measurements
reported by other companies. The principal adjustments are made in
respect of the amortisation of acquired intangibles and capitalised
development costs, non-recurring items and exchange gains or losses
charged to the income statement and their related tax effects. The
definition has been changed from that used in 2016 and that year's
figures restated.
The reconciliation between reported and underlying earnings and
basic earnings per share is shown below:
2017 2016
------------------------------------ ----------------- ---------
Earnings Earnings
GBP'000 GBP'000
Pence Pence
Reported loss per share
- continuing operations (2,608) (2.1)p (2,956) (2.4)p
Depreciation 155 0.1p 162 0.1p
Amortisation of acquired
intangibles after tax 1,178 1.0p 1,166 1.0p
Amortisation of capitalised
development costs 544 0.4p 294 0.3p
Non-recurring items after
tax 413 0.3p 542 0.4p
Exchange losses/(gains) 77 0.1p (1,485) (1.2)p
Adjusted (loss)/earnings
per share - continuing operations (241) (0.2)p (2,277) (1.8)p
------------------------------------ -------- ------- --------- -------
9. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of loss before taxation to net cash flows from
operating activities.
2017 2016
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Loss before tax - continuing operations (2,703) (2,227)
Loss before tax - discontinued operations (2,847) (53,410)
-------------------------------------------- --------- ---------
Total loss before tax (5,550) (55,637)
Depreciation of property, plant and
equipment 187 701
(Profit)/Loss on disposal of property,
plant and equipment (110) 1,009
(Profit)/Loss on disposal of VCS 1,335 -
Amortisation and impairment of development
costs 856 13,772
Amortisation and impairment of acquired
intangibles 1,418 25,609
Share-based payment expense 28 1,247
Finance income (47) (2)
Finance costs 348 351
Decrease/(increase) in inventories (19) 7,249
Decrease/(increase) in trade and other
receivables 2,489 3,670
Increase/(decrease) in trade and other
payables (3,345) 376
Increase in provisions (351) 420
-------------------------------------------- --------- ---------
Net cash generated from operating
activities (2,761) (1,235)
-------------------------------------------- --------- ---------
10. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL
REDEMPTION RESERVE
Number Share Share Capital Total
of shares Capital Premium redemption
reserve
'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------- --------- --------- ------------ ---------
At 1 January 2017 124,603 3,115 6,800 617 10,532
Share issues - - - - -
At 31 December
2017 124,603 3,115 6,800 617 10,532
------------------- ----------- --------- --------- ------------ ---------
11. NET FUNDS
Reconciliation of decrease in cash and cash equivalents to
movement in net cash:
Net cash Other Total
and cash borrowings net
equivalents GBP'000 cash
GBP'000 GBP'000
------------------------------- ------------- ------------ ---------
At 1 January 2017 457 (15,000) (14,543)
Cash flow for the year before
financing 4,564 - 4,564
Proceeds on issue of shares - - -
Movement in borrowings in the
year (3,500) 3,500 3,500
Dividend paid - - -
Exchange rate adjustments (272) - (272)
Cash and cash equivalents at
31 December 2017 1,249 (11,500) (10,251)
------------------------------- ------------- ------------ ---------
12. POST BALANCE SHEET EVENTS
In January 2018 the Group completed a cost out program with the
restructure of Pebble Beach Systems operations. Overall headcount
has been reduced from 78 to 62 achieving a net salary saving of
just over GBP1.0 million. Combined with savings from the closure of
the North America operations PBS overheads have been reduced by
GBP1.43 million. With additional saving from the closure of the PLC
head office and reduced professional fees, overall cost savings
from 2017 to 2018 total GBP3.6 million.
On 22 June 2018 the Group agreed terms with Santander UK PLC for
an amendment to the current Revolving Credit and Term Loan
Facilities agreement dated 17 March 2014 to secure the facility
until 30 November 2019. The amendment included a repayment schedule
totalling GBP1.0 million in each of 2018 and 2019, reducing the
overall facility to GBP9.5 million at the end of November 2019. The
amendment also included a simplification of banking covenants to an
absolute EBITDA test and a margin of 2.5% over LIBOR.
The Board is pleased to confirm that following the announcement
of its audited results for the year ended 31 December 2017, the
annual report and financial statements has been posted to
shareholders and a copy is also available to download from the
Group's website at www.pebbleplc.com.
Ends
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEMESLFASEDM
(END) Dow Jones Newswires
June 25, 2018 02:01 ET (06:01 GMT)
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