TIDMPEB
RNS Number : 4462X
Pebble Beach Systems Group PLC
26 April 2023
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR") as it forms
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement,
the inside information is now considered to be in the public domain
for the purposes of MAR.
Pebble Beach Systems Group plc
Final Results for the year ended 31 December 2022
Pebble Beach Systems Group plc (AIM: "PEB", "Pebble" or the
"Group"), a leading global software business specialising in
playout automation, content management and IP Control solutions for
the broadcast and streaming service markets, is pleased to announce
its final results for the year ended 31 December 2022.
Financial Headlines
2022 2021
------------------------------------ --------------- ---------------
Revenue GBP11.2m GBP10.6m
Gross profit GBP8.3m GBP8.1m
Gross margin 75% 77%
Adjusted EBITDA* GBP3.2m GBP3.3m
Adjusted EBITDA margin 28% 31%
Pre-tax profit for the year GBP1.2m GBP1.5m
Adjusted EPS** 1.1p 1.4p
Order Intake GBP11.3m GBP13.7m
Cash generated from operations GBP2.5m GBP3.8m
Cash conversion of adjusted EBITDA 79% 116%
Net Debt*** GBP5.8m GBP5.9m
Headlines
-- Delivered results in line with market expectations, with
revenue of GBP11.2 million (FY21: GBP10.6 million) and adjusted*
EBITDA of GBP3.2 million (FY21: GBP3.3 million), despite continued
tough economic conditions.
-- Strong second half of the year
o H2 2022 revenue up 7% on H2 2021
o H2 Revenue of GBP6.2 million up 22% on H1 Revenue (GBP5.0
million)
o H2 EBITDA of GBP1.9 million being 44% up on H1 (GBP1.3
million).
-- Gross profit continued to increase YoY, with a 2.5% uplift to
GBP8.3m, at a margin of 75% (FY21: 77%)
-- Recurring revenue from support contracts up 1% to GBP4.6
million (FY21: GBP4.6 million), being 41% of total revenue.
-- Orders of GBP11.3 million (FY21: GBP13.7 million) were 18%
down on FY21 a year that benefited from orders that were delayed
from FY20. On a FY21 timings-adjusted order intake (excluding the
orders delayed from FY20), orders were down 3% year on year.
-- The year closed with a strong order intake, setting up a
confident start to FY23 revenue. H2 orders of GBP6.3 million, 25%
up on H1 order intake (H1: GBP5.0 million).
-- Increased investment in our cloud-native solutions to support
broadcasters transition to IP-based technology. R&D spend of
GBP1.8 million in the year, 19% up on 2021 (2021: GBP1.5
million).
-- Increased investment in Sales and Marketing activities to
support the increasing market opportunities we are seeing.
-- The Group continues to reduce bank debt, with a further
GBP1.0 million reduction in gross debt from GBP7.5 million at the
end of FY21 to GBP6.5 million at the end of FY22. Net debt at year
end was GBP5.8 million (2021: GBP5.9 million).
-- Bank facilities re-negotiated in April 2022 with a term loan
facility until 30 September 2024.
-- The current financial year has started in line with the Board's expectations.
John Varney, Non-Executive Chairman, commented:
"I am delighted by the performance of the Group over the year.
Notwithstanding the undoubted macro-economic headwinds, the Group
has continued to deliver against expectations and its portfolio of
products remain essential to the broadcast and streaming service
markets.
We continue to invest in our technology with a product roadmap
very much focussed on delivering the IP based cloud native products
that the industry is seeking. Given the strength of our order book
as we exited 2022, and how we have traded in the first quarter of
the current financial year, we look forward to continuing the
progress being made by the Group".
* Adjusted EBITDA is defined as operating profit before
depreciation, amortisation and impairment of acquired intangibles,
amortisation of capitalised development costs, share based payment
expense, non-recurring items and exchange gains or losses charged
to the income statement.
** Adjusted EPS is calculated on the same basis as basic
earnings per share except for the adding back of the after-tax
effect of the adjustments for amortisation and impairment of
acquired intangibles, share based payment expense, non-recurring
items and exchange gains and losses.
*** Net debt excludes liabilities in respect of right of use
assets recognised under IRFS 16.
- ends -
For further information please contact:
+44 (0) 75 55 59
Peter Mayhead - CEO 36 02
finnCap Ltd (Nominated Adviser
and Broker )
Marc Milmo / Teddy Whiley - Corporate +44 (0) 207 220
Finance 0500
Tim Redfern / Sunila de Silva
- ECM
The Company is quoted on the LSE AIM market (PEB.L). More
information can be found at pebbleplc.com.
About Pebble Beach Systems
Pebble Beach Systems (trading as Pebble) is a world leader in
designing and delivering automation, integrated channel and
virtualised playout software solutions, with scalable products
designed for applications of all sizes. Founded in 2000, Pebble has
commissioned systems in more than 70 countries, with proven
installations ranging from single up to over 150 channels in
operation, and around 2000 channels currently on air under the
control of our automation technology. An innovative, agile company,
Pebble is focused on discovering its customers' requirements and
pain points, designing solutions which will address these elegantly
and efficiently, and delivering and supporting these professionally
and in accordance with its users' needs.
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
I am pleased to report on a good year for the business despite
the ongoing challenging economic climate.
In addition to this disruptive macro environment, the business
has also had to contend with the challenge of long hardware lead
times caused by the ongoing global shortage of semiconductors where
demand continued to exceed supply, affecting supply chains across
many industries. Customers also remained cautious around placing
orders, particularly during the 1(st) half of the year.
To finish the year in line with market expectations, therefore,
is a great achievement and it is encouraging that we are seeing the
market begin to open up. At the same time, we have seen a sense of
positivity in the business environment during the second half of
2022 following the return of face-to-face trade shows where we have
been able to strengthen our longstanding relationships and bonds
with our customers and end users.
We are pleased to have seen order intake increase by 25% in H2
FY22 vs. H1 FY22. This has set up FY23 where we started the year
with a strong revenue forecast given the position of the order
book. This, together with a large pipeline of opportunities and our
high recurring revenues, provides an encouraging outlook as we
focus on 2023.
We continue to invest in R&D to provide innovative solutions
that support broadcasters as they make the transition to more
flexible IP-based technologies.
We increased investment in Oceans, our new digital platform,
which has all the benefits of a cloud native environment allowing
our customers to establish all IP workflows whilst retaining their
ability to utilise investment made in our existing installed
solutions. In addition, in 2022 we launched 'Pebble Control Free'
as a new product, which provides free of charge entry-level access
to Pebble Control; a self-contained, scalable, IP-native connection
management solution for the broadcast community. This freemium
version encourages users to explore how easy it is to manage and
connect IP devices using the resources available via Pebble's new
self-service portal. It is available to end users and vendors,
filling an important gap in the IP technology stack with the aim of
making IP connectivity as simple as SDI.
Financials
Revenue in FY22 was up 5.2% at GBP11.2 million (2021: GBP10.6
million) including recurring revenue from support contracts up 0.7%
to GBP4.6 million (2021: GBP4.6 million). I am pleased to report
that recurring revenue represents 41% (2021: 43%) of total revenue
and provides good visibility of future years' forecasts.
Gross profit was GBP8.3 million at a margin of 75% (2021: GBP8.1
million at a margin of 77%).
Adjusted EBITDA was GBP3.2 million (2021: GBP3.3 million),
representing 28% of revenue (2021: 31%). The decrease in margin is
a result of planned investment in headcount and we are expecting
this margin to now stabilise.
Conversion of profit to cash remained strong in 2022 with 79% of
Adjusted EBITDA converted to cash generated from operations (2021:
116%) allowing our continued investment in new products and
services at the same time as continuing to reduce our levels of
debt. If we adjust for the non-recurring cash items of GBP0.3
million, conversion of profit to cash would be 88%.
We continue to view investment in the development of new
products and services as key to future growth and continue to
innovate by investing in new technologies. In the year, we
capitalised GBP1.8 million of development costs (amortised GBP1.1
million), (2021: capitalised GBP1.5 million and amortised GBP0.9
million). R&D expenditure as a proportion of revenue was 22%
(2021: 19%).
Net finance costs increased in 2022 reflecting the Group's
pay-down of GBP1.0 million of its term loan which was more than
offset by an increased interest rate of 5.23% (2021: 3.58%).
Adjusted profit before tax was GBP1.4million (FY21: GBP1.7 million)
and adjusted earnings per share was 1.1p (2021: 1.4p)
The profit before tax for the year was GBP1.2 million (2021:
GBP1.5 million) as a result of a planned increased investment in
headcount and non-recurring costs including professional fees
incurred in pursuit of a VCT fund raise after the Group received
advice that we met the qualifying rules to raise such funding.
Net debt (excluding IFRS 16 leases) at the year-end was reduced
by GBP0.1 million to GBP5.8 million (2021: GBP5.9 million),
comprising a reduced cash position at year end of GBP0.7 million
(2021: GBP1.6 million) and our gross debt being reduced by GBP1.0
million to GBP6.5 million (2021: GBP7.5 million).
TERM LOAN
We continue to enjoy a good relationship with our bank,
Santander, who remain very supportive of our strategy to reduce our
debt position whilst having the flexibility to invest in developing
our new technology solutions. On 13 April 2022, we were delighted
to sign a new term loan facility, refinancing the existing GBP7.15
million revolving credit facility agreement. The new term loan
secured an initial GBP7.15 million facility until 30 September
2024, with revised financial covenants and a repayment schedule
consistent with previous years.
MARKET POSITIONING
Pebble is a leading global software business specialising in
playout automation and content management and IP Control solutions
for broadcast and streaming services markets.
The main sector within the media tech market that is served by
Pebble's software is the playout automation market. Within this
sector, the customers that we principally interact with are
broadcasters, either directly or through service providers who
deliver playout services to those broadcasters, many of whom are
global organisations . These customers include companies such as
Fox News, CNBC, IMG, Phoenix Television and Globosat Canais. In
addition to playout automation, Pebble's other core software
technology is the Integrated Channel solution. These solutions have
been designed to support broadcasters and service providers to
deliver their scheduled content in a reliable and secure way. As
downtime is not acceptable in the broadcast industry, playout
software is exceptional at flagging any issues, creating backup
channels (redundancy) and providing disaster recovery.
One of Pebble's key strengths is an ability to focus on
collaboration with customers to determine their requirements and
design solutions which address their needs elegantly and
efficiently. During the lifecycle of the software solution, we
deliver full support services in accordance with customer
requirements.
Pebble's existing solutions consist of:
Automation : highly scalable enterprise level software solution
for broadcasters or service providers with complex workflow
requirements built around best-of-breed technology. The software
allows flexible deployment either on premises, on virtual machines
or in the cloud with exceptional levels of system resiliency.
Automation Lite : a simpler software offering optimised to allow
control of up to six channels, offering best-of-breed functionality
at an entry-level price.
Integrated Channel : under the control of our Automation
software this solution provides a one-stop-shop for channel playout
offering audio, video and graphics functionality. Hosted on
powerful servers, the software provides all the functionality of a
traditional broadcast chain.
Virtualised Playout : a software-only implementation of the
Integrated Channel solution, with the ability to host channels in a
private data centre or public cloud. Virtualised Playout can launch
and decommission channels for short term requirements and host
operational infrastructure in a standard data centre
environment.
Playout in a Box : a compact playout solution, combining a 'best
of breed' approach with an affordable price point but without the
need for high levels of flexibility. Controlling up to six channels
the self-contained Playout in a Box solution is suitable for new
market entrants, for testing new channels, or as a backup or
disaster recovery system for a smaller channel.
In addition to these core technology solutions, Pebble also
provides applications with discrete functionality. The current
range includes:
Pebble Remote : secure, real-time access to the playout
environment via secure web interfaces from anywhere, anytime. It is
easy to use with intuitive interfaces and aimed at anyone with a
Pebble solution who is seeking to control, monitor and manage
channels remotely.
Pebble Control : a recent release providing connection
management of IP devices suitable for TV stations, OB trucks,
production houses or anywhere that uses IP workflows. Control is
providing Pebble with the opportunity to enter new markets outside
of the automation space.
Orchestration : a soon to be released tool for the design and
management of complex workflows. The first fully native capability
based on Pebble's Oceans technology platform, initially focussed on
replacing and significantly enhancing the file management
capability provided by Pebble's current Automation software.
MARKET OPPORTUNITY AND PRODUCT DEVELOPMENT ROADMAP
We are very focused on recognising Pebble's core strengths and
technical capability to ensure we continue to enhance our portfolio
of software solutions to meet the evolving requirements of our
customers.
We believe that Pebble's current range of solutions, together
with the progress being made against its product roadmap, will
ensure that our technology offering will continue to be meet these
priorities.
Multi-platform content delivery
For Pebble, multi-platform content delivery is its ability to
deliver complex workflows to support our customers' linear and
on-demand requirements, Video On Demand, OTT and On-demand. We
continue to invest in the development of our Orchestration Engine,
responding to this type of market demand.
4K/UHD production
4K and UHD TV global sales have consistently increased since
2014 according to recent industry statistics, and it is our belief
that this area is becoming a priority within the broadcast sector.
Pebble has UHD installations such as the installation at IMG
Studios, a state-of-the-art broadcast production and worldwide
distribution facility based near London. Currently, these growing
signal complexities are addressed through expensive third-party
hardware but in future, Pebble's product development roadmap is
focused on an in-house developed cloud-based media processing
engine, to remove the dependency on third-party hardware.
IP infrastructure
IP infrastructure has been an area of focus for Pebble for some
time, and we continue to cement our position as the experts in IP.
Our customers are typically either transitioning to IP
infrastructure from legacy SDI deployments or are implementing IP
infrastructures in a new broadcasting facility or greenfield site,
and Pebble supports both. Pebble Control is a software solution
designed to manage the connectivity of IP devices and is designed
with security at its core. In the future, Pebble's Ocean's platform
will be hosting an automation engine that is IP-native, allowing
full, public-cloud deployment.
Remote production
At the beginning of 2020, coronavirus lockdowns across the world
pushed a surge in remote working across many industries globally,
the broadcast industry included. Our web-based management and
monitoring software, Pebble Remote, gives customers secure,
real-time access from anywhere allowing Pebble to successfully
deliver against customers' needs as they shifted to geographically
dispersed operations.
Cloud Compute
Pebble is also seeking to better address the Cloud Compute
priority. We believe the move to remote working has accelerated the
move to the cloud. Over 50 percent of broadcasters have already
deployed some form of cloud-based technology with 40 percent
stating they are likely to continue adoption according to data from
the IABM. At present, Pebble's technology can be utilised through
the cloud for storage and hosting capabilities. To further enhance
our offering, the Oceans platform is being designed to provide
customers with software that is fundamentally cloud-centric.
Having regard to the key trends being seen in the industry, and
the undoubted market opportunity before it, the Board remains
focussed on delivering against its product development roadmap
of:
(i) Oceans Automation; an automation only capability to replace
the current playout automation offering with a secure cloud-native
solution.
(ii) Media Processing Engine; to reduce the requirement for
hardware to provide video playout capability. By developing a
software solution, this will enable Pebble to provide a fully cloud
native integrated channel capability.
(iii) Pebble Control; by accelerating the ongoing development of
its IP control tool, the directors believe that this will provide
the opportunity to target the product into any market requiring IP
network-based device control.
GOING CONCERN
The directors are required to assess the Group's ability to
continue to trade as a going concern. The details of this review
are covered in the extract from the Notes to the Financial
Statements below. The Board concluded, from its thorough assessment
of the detailed forecasts, that the Group will have sufficient
resources to meet its liabilities during the review period through
to 31 August 2024 and that it is appropriate that the Group prepare
accounts on a going concern basis.
BOARD CHANGES
As previously announced on 23 August 2022, David Dewhurst
resigned as a Director of the Company and left the executive role
of Chief Finance Officer. For the foreseeable future the CFO will
not be replaced and the finance function, headed up by Paul Inzani
our Head of Finance, will report to the CEO.
Graham Pitman, Senior Independent Non-Executive Director, has
notified the Board of his intention to stand down at the end of
April 2023. Graham has been with the Group for five years and has
provided an invaluable breadth of industry experience in both the
traditional and new technologies segments. The Board do not intend
to recruit a replacement. Richard Logan, who has been with the
Group for three years, will become Senior Independent Non-Executive
Director at the end of April.
TRADING OUTLOOK
The current financial year has started in line with the Board's
expectations. The Group has demonstrated its resilience throughout
the economic downturn and the ongoing supply chain stresses.
Although the broadcast market continues to be challenging, we
remain confident in our strategy and encouraged by the continued
strengthening of the Group's revenues and financial position and
increasing level of recurring revenue.
John Varney
Non-Executive Chairman
For the year ended 31 December 2022
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2022
2022 2021
Notes GBP000 GBP000
Revenue 4 11,167 10,620
Cost of sales (2,821) (2,490)
-------- --------
Gross profit 8,346 8,130
Sales and marketing expenses (2,234) (1,777)
Research and development expenses (1,696) (1,417)
Administrative expenses (2,789) (3,066)
Operating profit 5 1,627 1,870
----------------------------------------------- ------ -------- --------
Operating profit is analysed as:
Adjusted EBITDA 3,166 3,282
Non-recurring items 5 (362) (244)
Share based payment expense (53) (53)
Exchange gains/(losses) credited/(charged)
to the income statement 145 (40)
----------------------------------------------- ------ -------- --------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 2,896 2,945
----------------------------------------------- ------ -------- --------
Depreciation (168) (160)
Amortisation of capitalised development
costs (1,101) (915)
----------------------------------------------- ------ -------- --------
Operating profit 1,627 1,870
----------------------------------------------- ------ -------- --------
Finance costs (432) (373)
Finance income - -
Profit before tax 1,195 1,497
Tax 6 (13) (31)
-------- --------
Net result for the year 1,182 1,466
Earnings per share from continuing operations
attributable to the owners of the parent
during the year
Basic earnings per share 7 0.9p 1.2p
Diluted earnings per share 7 0.9p 1.2p
----------------------------------------------- ------ -------- --------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
2022 2021
GBP000 GBP000
--------------------------------------------- ------- -------
Profit for the financial year 1,182 1,466
Other comprehensive income - items that
may be reclassified subsequently to profit
or loss:
Exchange differences on translation of
overseas operations
- continuing operations (34) (1)
Total profit for the year attributable
to owners of the parent 1,148 1,465
---------------------------------------------- ------- -------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2022
Capital
Ordinary Share redemption Merger Translation Accumulated
shares premium reserve reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 1 January 2021 3,115 6,800 617 29,778 (150) (43,626) (3,466)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Share based payments: value
of employee services - - - - - 53 53
Transactions with employees - - - - - 53 53
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Retained profit for the year - - - - - 1,466 1,466
Exchange differences on translation
of overseas operations - - - - (1) - (1)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Total comprehensive income
for the period - - - - (1) 1,466 1,465
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 31 December 2021 3,115 6,800 617 29,778 (151) (42,107) (1,948)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 1 January 2022 3,115 6,800 617 29,778 (151) (42,107) (1,948)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Share based payments: value
of employee services - - - - - 53 53
Transactions with employees - - - - - 53 53
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Retained profit for the year - - - - - 1,182 1,182
Exchange differences on translation
of overseas operations - - - - (34) - (34)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Total comprehensive income
for the period - - - - (34) 1,182 1,148
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 31 December 2021 3,115 6,800 617 29,778 (185) (40,872) (747)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
2022 2021
Notes GBP000 GBP000
----------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Intangible assets 6,307 5,601
Property, plant and equipment 571 349
Other non-current assets 38 -
--------- ---------
6,916 5,950
--------- ---------
Current assets
Inventories 497 430
Trade and other receivables 3,526 3,632
Current tax assets 8 -
Cash and cash equivalents 728 1,639
--------- ---------
4,759 5,701
Liabilities
Current liabilities
Financial liabilities - borrowings 935 1,200
Trade and other payables 5,716 5,832
Lease liabilities - current 96 173
--------- ---------
6,747 7,205
--------- ---------
Net current liabilities (1,988) (1,504)
--------- ---------
Non-current liabilities
Financial liabilities - borrowings 5,550 6,350
Lease liabilities - non-current 125 44
5,675 6,394
--------- ---------
Net liabilities (747) (1,948)
----------------------------------------------- ------ --------- ---------
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 29,778 29,778
Translation reserve (185) (151)
Retained earnings (40,872) (42,107)
--------- ---------
Total deficit (747) (1,948)
----------------------------------------------- ------ --------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
2022 2021
Notes GBP000 GBP000
------------------------------------------------ ------ -------- --------
Cash flows from operating activities
Cash generated from operations 9 2,511 3,815
Interest paid (432) (373)
Taxation paid (21) (31)
-------- --------
Net cash from operating activities 2,058 3,411
-------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (193) (82)
Expenditure on capitalised development
costs (1,807) (1,515)
Net cash used in investing activities (2,000) (1,597)
-------- --------
Cash flows from financing activities
Cash used in repayment of financing activities 11 (1,000) (1,000)
Net cash used in financing activities (1,000) (1,000)
-------- --------
Net (decrease)/increase in cash and cash
equivalents (942) 814
Effect of foreign exchange rate changes 11 31 (1)
Cash and cash equivalents at 1 January 1,639 826
Cash and cash equivalents at 31 December 728 1,639
-------- --------
Net debt comprises:
Cash and cash equivalents 728 1,639
Borrowings (6,485) (7,550)
-------- --------
Net debt at 31 December 11 (5,757) (5,911)
------------------------------------------------ ------ -------- --------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 Unit 1, First Quarter, Blenheim Road,
Epsom, Surrey, KT19 9QN.
The registered number of the Company is 04082188.
This results announcement was approved for issue at close of
business on 25 April 2023.
2. BASIS OF PREPARATION
The financial information contained in these condensed financial
statements does not constitute the Group's statutory accounts
within the meaning of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2022 and 31
December 2021 have been reported on by CLA Evelyn Partners Limited
and Grant Thornton UK LLP respectively, with an unmodified audit
opinion.
Whilst the financial information included in this Annual
Financial Results announcement has been computed in accordance with
International Financial Reporting Standards (IFRS) this
announcement, due to its condensed nature, does not itself contain
sufficient information to comply with IFRS.
Statutory accounts for the year ended 31 December 2021 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 31 December 2022, prepared under IFRS, will be
available on the Group's website: https://www.pebbleplc.com and
will be delivered to the Registrar in due course. The Group's
principal accounting policies as set out in the 2021 statutory
accounts have been applied consistently in all material
respects.
3. GOING CONCERN
The directors are required to assess the Company's and the
Group's ability to continue to trade as a going concern.
At 31 December 2022, the Group's net debt was GBP5.8 million
(2021: GBP5.9 million), comprising cash of GBP0.7 million (2021:
GBP1.6 million) and the term loan from Santander of GBP6.5 million
(2021: GBP7.5 million).
We enjoy a close relationship with our bank and have regular
review meetings with them. On 13 April 2022, we signed a new term
loan through to 30 September 2024, which re-financed the existing
GBP7.15 million revolving credit facility at the same level of
commitment, with repayment levels consistent with previous years
and appropriate financial covenants.
The directors are confident that any loan extensions required
post September 2024 would be granted given the historic track
record.
To assess the appropriateness of preparing financial statements
on a going concern basis, management prepared detailed projections
of the consolidated income statements, the statement of financial
position and cash flow statements through to 31 August 2024. This
review period extends to the end of the financial year for 2024,
which is looking forward for four six-month periods beyond that
covered by the current annual report. The projections included
testing against the minimum liquidity and cash flow cover covenants
required by the new term loan facility.
These projections used the budget for 2023 and were updated for
current trading and forecasts. This analysis was then extended to
the end of 2024. The projections were stress tested in two ways.
Pipeline orders for 2023 at less than 50% probability were removed
and a 20% reduction in SLA renewals in 2023. The pipeline for 2023
was assessed based on historic conversion rates. The existing
support service contracts, where revenue is recognised over time
were assessed based on historic renewal rates, to establish the
likely renewal of this recurring revenue. Despite a 20% drop in SLA
renewals management proved the business is still functional.
Management reviewed the resource levels and marketing spend
required to support the reduced revenue and reflected cost
reductions in the forecast. The Board has concluded from its
thorough assessment of the detailed forecasts, that the Group will
have sufficient resources to meet its liabilities during the review
period through to 31 August 2024, that it will meet the bank
covenants and that it is appropriate that the Group and the Company
prepare accounts on a going concern basis.
4. 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 PLC 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 PLC Total
Beach Systems costs GBP000
----------------------------------------------- ---------------- -------- --------
Year to 31 December 2022
Broadcast 11,167 - 11,167
Total revenue 11,167 - 11,167
---------------- -------- --------
Adjusted EBITDA 4,051 (885) 3,166
Depreciation (168) - (168)
Non-recurring items 66 (428) (362)
Amortisation of capitalised development
costs (1,101) - (1,101)
Share based payment expense - (53) (53)
Exchange gains 145 - 145
Finance costs (20) (412) (432)
Intercompany finance income/(costs) 211 (211) -
---------------- -------- --------
Profit/(loss) before taxation 3,184 (1,989) 1,195
Taxation (223) 210 (13)
---------------- -------- --------
Profit/(loss) for the year being attributable
to owners of the parent 2,961 (1,779) 1,182
Year to 31 December 2021
Broadcast 10.620 - 10,620
Total revenue 10,620 - 10,620
---------------- -------- --------
Adjusted EBITDA 3,862 (580) 3,282
Depreciation (160) - (160)
Non-recurring items (244) - (244)
Amortisation of capitalised development
costs (915) - (915)
Share based payment expense - (53) (53)
Exchange losses (40) - (40)
Finance costs (81) (292) (373)
Intercompany finance income/(costs) 107 (107) -
---------------- -------- --------
Profit/(loss) before taxation 2,529 (1,032) 1,497
Taxation (298) 267 (31)
---------------- -------- --------
Profit/(loss) for the year being attributable
to owners of the parent 2,231 (765) 1,466
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.
2022 2021
Total Total
GBP000 GBP000
---------------- --------- ---------
By market
UK & Europe 4,967 6,385
North America 1,461 927
Latin America 787 567
Middle East
and Africa 3,466 1,940
Asia / Pacific 486 801
11,167 10,620
---------------- --------- ---------
Net assets
The table below summarises the net assets of the Group by
division. The statement of financial position 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.
concern
2022 2021
GBP000 GBP000
---------------------- -------- --------
By division:
Pebble Beach Systems 6,232 5,860
PLC costs (6,979) (7,808)
(747) (1,948)
---------------------- -------- --------
5. OPERATING PROFIT
The following items have been included in arriving at the
operating profit for the continuing business:
2022 2021
GBP000 GBP000
----------------------------------------------------- ------- -------
Charge of inventory 1,457 1,288
Director and employee costs 6,231 5,888
Depreciation of property, plant and equipment 168 160
Non-recurring items 362 244
Exchange (gains)/losses (credited)/charged to profit
and loss (145) 40
Amortisation of capitalised development costs 1,101 915
Other expenses
Other expenses comprise:
2022 2021
GBP000 GBP000
--------------------- -------- --------
Non-recurring items 362 244
--------------------- -------- --------
Non-recurring items
The following items are excluded from management's assessment of
profit because by their nature they could distort the annual trend
in the Group's earnings. These 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:
2022 2021
GBP000 GBP000
----------------------------------------------------- -------- --------
Provision for costs of transition to remote working (66) 244
CFO costs during notice period 171 -
Professional services relating to potential new 257 -
equity funding (see below)
----------------------------------------------------- -------- --------
362 244
----------------------------------------------------- -------- --------
During the period, after having been given assurance from HMRC
that we qualified, we explored a potential equity raise, led by a
VCT qualifying raise, that would have provided the Group with
additional capital primarily to accelerate our development of next
generation solutions. Whilst we secured good levels of support from
existing and new investors, a combination of a worsening global
economic situation and falling investor sentiment for the equity
markets generally led us to curtail our plans at a fairly late
stage in the process. As a result, we incurred professional fees
totalling GBP0.3m which have been disclosed separately in the
income statement as non-recurring items.
6. INCOME TAX EXPENSE
2022 2021
GBP000 GBP000
--------------------------------------- -------- --------
Current tax
UK corporation tax - -
Foreign tax - current year 21 31
Adjustments in respect of prior years (8) -
--------------------------------------- -------- --------
Total current tax 13 31
--------------------------------------- -------- --------
Deferred tax
UK corporation tax - -
Effect of changes in UK tax rate - -
Adjustments in respect of prior years - -
--------------------------------------- -------- --------
Total deferred tax - -
--------------------------------------- -------- --------
Total taxation 13 31
--------------------------------------- -------- --------
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate would increase from 19 per cent
to 25 per cent. This was confirmed in Autumn 2022. Deferred taxes
at the statement of financial position date have been measured
using these enacted tax rates and reflected in these financial
statements.
7. 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. The average market value of the Company's shares
for the purpose of calculating the dilutive effect of share options
was based on quoted market prices for the year during which the
options were outstanding.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
2022 2021
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
GBP000 000s pence GBP000 000s pence
--------------------------- --------- ----------- --------- --------- ----------- ----------
Basic earnings per
share
Profit attributable
to continuing operations 1,182 0.9p 1,466 1.2p
Basic earnings per share 1,182 124,477 0.9p 1,466 124,477 1.2p
--------------------------- --------- ----------- --------- --------- ----------- ----------
Diluted earnings per
share
Profit attributable
to continuing operations 1,182 0.9p 1,466 1.2p
Diluted earnings per
share 1,182 125,709 0.9p 1,466 125,775 1.2p
--------------------------- --------- ----------- --------- --------- ----------- ----------
Adjusted earnings
The directors believe that adjusted EBITDA, 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, share based payment expense,
non-recurring items and exchange gains or losses charged to the
income statement and their related tax effects.
The reconciliation between reported and underlying earnings and
basic earnings per share is shown below:
2022 2021
----------------------------- -------------------- ----------------------
Earnings
per Earnings
Earnings share Earnings per share
GBP000 pence GBP000 pence
----------------------------- --------- --------- --------- -----------
Reported earnings and EPS 1,182 0.9p 1,466 1.2p
Share based payment expense 53 0.0p 53 0.0p
Non-recurring items 294 0.3p 198 0.2p
Exchange (gains)/losses (117) (0.1p) 32 0.0p
----------------------------- --------- --------- --------- -----------
Adjusted earnings and EPS 1,412 1.1p 1,749 1.4p
----------------------------- --------- --------- --------- -----------
2021 was changed to include non-recurring items.
8. INTANGIBLE ASSETS
Acquired Acquired Capitalised
customer intellectual development
Goodwill relationships property costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- --------------- -------------- ------------- ---------
Cost
At 1 January 2021 3,218 4,493 3,350 5,423 16,484
Additions - - - 1,515 1,515
------------------------- -------- --------------- -------------- ------------- ---------
At 1 January 2022 3,218 4,493 3,350 6,938 17,999
Additions - - - 1,807 1,807
------------------------- -------- --------------- -------------- ------------- ---------
At 31 December 2022 3,218 4,493 3,350 8,745 19,806
------------------------- -------- --------------- -------------- ------------- ---------
Accumulated amortisation
At 1 January 2021 - 4,493 3,350 3,640 11,483
Additions - - - 915 915
------------------------- -------- --------------- -------------- ------------- ---------
At 1 January 2022 - 4,493 3,350 4,555 12,398
------------------------- -------- --------------- -------------- ------------- ---------
Additions - - - 1,101 1,101
At 31 December 2022 - 4,493 3,350 5,656 13,499
------------------------- -------- --------------- -------------- ------------- ---------
Net book value
At 31 December 2022 3,218 - - 3,089 6,307
------------------------- -------- --------------- -------------- ------------- ---------
At 31 December 2021 3,218 - - 2,383 5,601
------------------------- -------- --------------- -------------- ------------- ---------
At 1 January 2021 3,218 - - 1,783 5,001
------------------------- -------- --------------- -------------- ------------- ---------
The amortisation of development costs is included in research
and development expenses in the Consolidated Income Statement.
Within capitalised development costs there are GBP4.1 million
(2021: GBP3.2 million) of fully written down assets that are still
in use.
9. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of profit before taxation to net cash flows from
operations.
2022 2021
GBP000 GBP000
---------------------------------------------------- -------- --------
Profit before tax - continuing operations 1,195 1,497
Depreciation of property, plant and equipment 168 160
Amortisation and impairment of development costs 1,101 915
Non-recurring item (66) 244
Share-based payment expense 53 53
Finance costs 432 373
Increase in inventories (67) (282)
Decrease/(increase) in trade and other receivables 3 (507)
(Decrease)/increase in trade and other payables (308) 1,362
Cash generated from operations 2,511 3,815
---------------------------------------------------- -------- --------
10. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL
REDEMPTION RESERVE
Number of Share Share Premium Capital Total
shares Capital redemption
GBP000 reserve
000 GBP000 GBP000 GBP000
--------------------- ---------- --------- -------------- ------------ --------
At 1 January 2022 124,603 3,115 6,800 617 10,532
Share issues - - - - -
At 31 December 2022 124,603 3,115 6,800 617 10,532
--------------------- ---------- --------- -------------- ------------ --------
11. NET FUNDS
Reconciliation of change in cash and cash equivalents to
movement in net cash:
Net cash and Other Total
cash equivalents borrowings net debt
GBP000 GBP000 GBP000
------------------------------------------ ------------------ ------------ ----------
At 1 January 2022 1,639 (7,550) (5,911)
Cash flow for the year before financing 58 - 58
Movement in borrowings in the year (1,000) 1,000 -
Netting of arrangement fee - 65 65
Exchange rate adjustments 31 - 31
Cash and cash equivalents at 31 December
2022 728 (6,485) (5,757)
------------------------------------------ ------------------ ------------ ----------
At 1 January 2021 826 (8,550) (7,724)
------------------------------------------ ------------------ ------------ ----------
Cash flow for the year before financing 1,814 - 1,814
Movement in borrowings in the year (1,000) 1,000 -
Exchange rate adjustments (1) - (1)
------------------------------------------ ------------------ ------------ ----------
Cash and cash equivalents at 31 December
2021 1,639 (7,550) (5,911)
------------------------------------------ ------------------ ------------ ----------
12. POST STATEMENT OF FINANCIAL POSITION EVENTS
None.
The Board is pleased to confirm that following the publication
of its audited results for the year ended 31 December 2022, the
annual report and financial statements will be posted to
shareholders by 25 May 2023 and a copy will also be available to
download from the Group's website at pebbleplc.com.
Ends
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END
FR SEMFWIEDSEIL
(END) Dow Jones Newswires
April 26, 2023 02:00 ET (06:00 GMT)
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