TIDMPEB
RNS Number : 3994L
Pebble Beach Systems Group PLC
30 April 2020
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 ("MAR"). 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
Results for the year ended 31 December 2019
Pebble Beach Systems Group plc (AIM: "PEB", "Pebble" or the
"Group"), a leading global software business specialising in
playout automation and content management solutions for the
broadcast and streaming service markets, is pleased to announce its
final results for the year ended 31 December 2019.
Financial Headlines
2019 2018
------------------------------------------- ----------- ----------
Revenue GBP11.2m GBP9.2m
Gross Margin GBP8.3m GBP6.7m
74% 73%
Adjusted EBITDA* GBP3.8m GBP2.5m
% of Revenues 34% 27%
Adjusted earnings per share* 2.5p 1.6p
Order Intake GBP10.3m GBP10.8m
Net cash inflow from operating activities GBP2.0m GBP1.7m
Net Debt GBP8.4m GBP9.4m
Headlines
-- Key financial metrics all ahead of the previous year
-- Gross margin improved to 74% (2018: 73%)
-- Adjusted* EBITDA improved materially to GBP3.8 million (2018: GBP2.5 million)
-- Net cash inflow from operating activities improved to GBP2.0 million (2018: GBP1.7 million)
-- Extension to the bank credit facility until 30 November 2021,
providing a stable capital base
-- Net debt reduced from GBP9.4 million to GBP8.4 million during the year
*Adjusted EBITDA, a non-GAAP measure, is EBITDA before
non-recurring items and foreign exchange gains. Adjusted earnings
per share is calculated on the same basis after taking account of
related tax effects.
John Varney, Non-Executive Chairman of Pebble Beach Systems
Group plc, said:
"2018 was a year of transformation, and 2019 has been a year of
validation. We have shown that the steps we had taken were what the
market, in which we occupy a leading position, needed. We won some
fantastic new business, for example the order in excess of
GBP600,000 that we secured from IMG. IMG were contracted by Amazon
Prime Video to provide playout services for the high-profile live
coverage of 20 premiership matches during December. The solution
included Pebble Beach Systems' UHD-capable playout servers and
control software for automated ad-insertion. We were delighted with
this validation of our product suite and the commercial position
that we have developed as a business.
We concluded the year having shown that we can both deliver upon
our expectations and we can innovate. We are a key component of
this industry that changes rapidly and is always at the forefront
of technological innovation. We are fortunate to have some hugely
talented individuals within Pebble Beach Systems who are constantly
delivering new and exciting solutions that enable us to maintain
our position as a leading supplier of broadcast automation to the
world's largest broadcasters.
As we entered 2020, I was encouraged by the excellent progress
we had made and the market positioning of our company.
Following the events of the Coronavirus (Covid-19) pandemic over
the past several weeks, management undertook a risk assessment of
its potential impact on our business, and assessed that it is
unlikely that our customers will see a material downturn in demand
with the potential reduction in advertising spend being offset with
the potential for increased activity as populations turn towards
media for information and entertainment during a time of isolation
and uncertainty.
At this time management continue to believe that the virus does
not necessitate any change to our strategy for growth but given the
impact Coronavirus (Covid-19) is having across the world, we
continue to monitor the situation very closely.
- ends -
For further information please contact:
+44 (0) 75 55 59
36 02
Peter Mayhead- Chief Executive +44 (0) 1256 962
Dominic Del Mar- Investor Relations 978
finnCap Ltd (Nominated Adviser
and Broker )
Marc Milmo / Hannah Boros - 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 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
2019 was another strong year of growth and cash generation. As
we have done since I became Chairman, our strategy in the year was
to walk the fine line between paying down our debt position whilst
also reinvesting in the business to ensure that we are positioned
at the forefront of the broadcasting industry. As the industry
morphs ever more into one that is led by increasingly flexible, IP
led products we have to anticipate these changes and ensure that we
continue to be able to benefit from our industry relationships and
know-how. Our mission is simple; by maintaining our disciplines on
costs and by being focussed on growth we will provide value to our
shareholders.
FINANCIAL RESULTS
Revenue for 2019 of GBP11.2 million vs 2018: GBP9.2 million.
Overall gross margin in 2019 was GBP8.3 million (74%) vs 2018:
GBP6.7 million (73%).
Adjusted operating profit of GBP3.8m in 2019 vs 2018: GBP2.5
million before non-recurring items, depreciation and amortisation
of GBP2.0 million (2018: GBP2.7 million) are deducted.
The Company continues to view investment in the development of
new products and services as key to future growth and we will
continue to invest in innovation and new technologies. In 2019,
Pebble Beach Systems capitalised GBP1.0 million of development
costs (amortised GBP0.8 million), (2018: GBP0.7 million) (amortised
GBP0.8 million). We believe this is what puts Pebble Beach Systems
at the forefront of the industry, and it is why we are able to win
the contracts that we have seen in 2019.
Net finance costs were higher in 2019 reflecting the Group's
pay-down of some of its revolving credit facility ("RCF") and
overdraft being more than offset by the full year impact of a rate
of 3.30% (2018: 3.30%) and the adoption of IFRS 16. The available
RCF as at 31 December 2019 was brought down to GBP9.5 million, all
of which had been drawn fully down (2018: GBP10.7 million, of which
GBP10.7 million had been fully drawn down). Interest paid on the
RCF was GBP0.4 million (2018: GBP0.3 million).
Liquidity risk continued to be reduced, with combined secured
bank loans and trade and other payables being further reduced by
GBP1.3 million from GBP15.3 million in 2018 to GBP14.0 million at
the end of 2019.
Order intake for the full year was GBP10.3 million vs 2018:
GBP10.8 million.
GOING CONCERN
The directors are required to make an assessment of the
Company's and the Group's ability to continue to trade as a going
concern.
At 31 December 2019 the Group's net debt was GBP8.4 million
(2018: GBP9.4 million) comprising net cash of GBP1.1 million (2018:
GBP1.3 million) and the drawn down RCF of GBP9.5 million (2018:
GBP10.7 million).
We maintain a good relationship with our bank and on 10 February
2020 a 12-month extension to the current GBP9.5 million loan
agreement was signed. The revision secures the facility until 30
November 2021 with banking covenants and a repayment schedule in
place. As noted below, we have taken advantage of the Government's
repayment holiday initiatives and have agreed to defer the first
payment that was due on 30 June 2020 under our current Facility
Agreement signed on 10 February 2020.
In order to assess the appropriateness of preparing the
financial statements on a going concern basis, management prepared
detailed projections of expected cash flows for a period of 3 years
for review by the Board. These projections include the impact of
margin improvement strategies and sales growth.
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 improvement of gross margin.
Additionally, it considered sensitivities regarding the ongoing
revenue and cost assumptions, including the impact of Brexit and
extreme and unlikely consequences resulting from the Coronavirus
(Covid-19) outbreak.
All the Group's employees and contractors are currently working
from home, unless it is essential that they do otherwise. There has
been minimal disruption, as remote working practices have been
extended and adopted. "Virtual" trade shows have been held to
replace those cancelled and significant new orders have been won
since the restrictions were announced. Interest in our products
that permit remote working is high.
The Board have concluded that the Group will have sufficient
resources to meet its liabilities for the foreseeable future and
therefore the Group and hence the Company remains a going
concern.
BOARD CHANGES
As previously announced, the Board are delighted that Richard
Logan will join the Board as a Non-Executive Director, effective 1
May 2020. Richard has had a highly successful career both in
private companies and public companies, most recently serving as
Chief Financial Officer at Iomart Group PLC a cloud computing
company quoted on AIM, from 2006 until his retirement in 2018.
Richard helped grow Iomart from a breakeven, GBP20 million revenue
company to a quoted business with over the GBP100 million in
revenue and adjusted EBITDA of GBP40 million. Whilst at Iomart,
Richard oversaw 19 acquisitions, the full finance function along
with the PLC corporate governance functions. Richard's experience
and knowledge of the sector and public markets will be invaluable
to the Group's future. Richard's roles within the industry will
bring a valuable level of experience to the Board.
Robin Howe, Senior Independent Non-Executive Director will stand
down at the close of the next AGM. Robin has been with the Group
for 14 years and has provided invaluable support and consistency
throughout his tenure, helping shape the role of the Board in
recent times and has been an engaged mentor for senior members of
the Company over many years. The Board wish Robin every success in
his future endeavors.
TRADING OUTLOOK
2020 has started well with initial growth in our pipeline and
order intake in line with management expectation of building on the
success of the past two years.
In the past several weeks, it has become increasingly clear that
the events surrounding the Coronavirus (Covid-19) has the potential
to impact our strategic growth plans. As previously reported on 24
March 2020, management undertook a risk assessment of the potential
impact of the virus to identify and implement any actions to
mitigate said risk. As part of that review we assessed that it is
unlikely that our customers will see a material downturn in demand;
it is possible that they may experience an increase in demand as
populations turn towards media for information and entertainment
during a time of isolation and uncertainty, balancing out any
potential downturn in advertising spend. At the same time, our
ongoing focus on automation and remote support has allowed us to
adapt to the global need to complete project implementations
remotely.
In order to mitigate potential cash flow risks caused by
uncertainties relating to Coronavirus (Covid-19), management
undertook a further precaution by making a formal application for a
Government capital repayment holiday. On 22 April 2020, our bank
approved the deferment of the next loan repayment of GBP380,000 due
on 30 June 2020 under our current Facility Agreement signed on 10
February 2020. Furthermore, the bank has indicated their support
should a deferment of the September repayment be considered
necessary, as global uncertainties around Coronavirus (Covid-19)
become clear.
At this time management continue to believe that the virus does
not necessitate any change to our strategy for growth but given the
impact Coronavirus (Covid-19) is having across the world, we
continue to monitor the situation very closely.
John Varney
Non-Executive Chairman's Statement
For the year ended 31 December 2019
FINANCIAL REVIEW
Divisions and Markets
For the year ended 31 December 2019
Continuing Operations
2019 2018 Change
GBP'm GBP'm %
----------------------- ------- ------- -------
Pebble Beach Systems 11.2 9.2 22.1%
-------
Total Revenue 11.2 9.2 22.1%
----------------------- ------- ------- -------
Pebble Beach Systems 4.4 2.9 54.1%
Central (0.6) (0.4) 64.5%
----------------------- ------- ------- -------
Total adjusted EBITDA 3.8 2.5 52.4%
----------------------- ------- ------- -------
Pebble Beach Systems has contributed GBP11.2 million of revenue
and GBP4.4 million of EBITDA in 2019. Non-recurring items excluded
from adjusted profit are GBPNil (2018: GBP0.3 million).
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 2019 is GBP3.2 million (2018: 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 GBPNil (2018: GBP0.3 million) of non-recurring
costs to the consolidated income .
Cash flows
The Group held cash and cash equivalents of GBP1.1 million at 31
December 2019 (2018: GBP1.3 million). The table below summarises
the cash flows for the year.
2019 2018
GBP'm GBP'm
------------------------------------------ ------ ------
Cash generated from operating activities 2.0 1.7
Net cash used in investing activities (1.1) (0.8)
Net cash used in financing activities (1.1) (0.8)
Effects of foreign exchange - -
------------------------------------------ ------ ------
Net (decrease)/increase in cash and
cash equivalents (0.2) 0.1
Cash and cash equivalents at 1 January 1.3 1.2
------------------------------------------ ------ ------
Cash and cash equivalents at 31 December 1.1 1.3
------------------------------------------ ------ ------
As at 31 December 2019 net debt was GBP8.4 million (cash GBP1.1
million and bank debt of GBP9.5 million). At the end of January
2020, net debt had reduced to GBP8.1 million. The Group was using
GBP9.5 million of its available facilities in December 2019.
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 2019 2018 2019 2018
------------------------------ ------- ------- -------- --------
US dollar 1.277 1.335 1.321 1.277
------------------------------ ------- ------- -------- --------
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 2019
2019 2018
Notes GBP'000 GBP'000
Revenue 3 11,200 9,174
Cost of sales (2,931) (2,515)
------------- --------
Gross profit 8,269 6,659
Sales and marketing expenses (2,044) (2,163)
Research and development expenses (1,298) (1,222)
Administrative expenses (2,247) (1,759)
Foreign exchange losses/(gains) (71) 28
Other expenses (889) (1,723)
Operating profit/(loss) 4 1,720 (180)
---------------------------------------------------- ------ ------------- --------
Operating profit/(loss) is analysed as:
Adjusted earnings before interest, tax,
depreciation and amortisation 3,765 2,470
Non-recurring items 3, 4 - (304)
Exchange (losses)/gains (charged)/credited
to the income statement (71) 28
---------------------------------------------------- ------ ------------- --------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 3,694 2,194
---------------------------------------------------- ------ ------------- --------
Depreciation (238) (127)
Amortisation and impairment of acquired
intangibles (889) (1,419)
Amortisation of capitalised development
costs (847) (828)
Finance costs 5 (393) (296)
Finance income 5 2 4
Profit/(loss) before tax 1,329 (472)
Tax 6 82 253
------------- --------
Profit/(loss) for the year being loss attributable
to owners of the parent 1,411 (219)
Net result from discontinued operations 39 195
------------- --------
Net result for the year 1,450 (24)
Earnings per share from continuing and
discontinued operations attributable to
the owners of
the parent during the year
Basic earnings/(loss) per share
From continuing operations 7 1.1p (0.2)p
From discontinued operations 0.0p 0.2p
------------- --------
From profit/(loss) for the year 1.1p 0.0p
---------------------------------------------------- ------ ------------- --------
Diluted earnings/(loss) per share
From continuing operations 7 1.1p (0.2)p
From discontinued operations 0.0p 0.2p
------------- --------
From profit/(loss) for the year 1.1p 0.0p
---------------------------------------------------- ------ ------------- --------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
----------------------------------------------- -------- --------
Profit/(loss) for the financial year 1,450 (24)
Other comprehensive income - items that
may be reclassified subsequently to profit
or loss:
Exchange differences on translation of
overseas operations
- continuing operations 19 (58)
- discontinued operations - 2
Total profit/(loss) for the year attributable
to owners of the parent 1,469 (80)
------------------------------------------------ -------- --------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2019
Capital
Ordinary Share redemption Merger Translation Accumulated
shares premium reserve reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 1 January 2018 3,115 6,800 617 29,778 (139) (46,236) (6,065)
Retained loss for the year - - - - - (24) (24)
Exchange differences on translation
of overseas operations - - - - (56) - (56)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Total comprehensive expense
for the period - - - - (56) (24) (80)
At 31 December 2018 3,115 6,800 617 29,778 (195) (46,260) (6,145)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 1 January 2019 3,115 6,800 617 29,778 (195) (46,260) (6,145)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Share based payments: value
of employee services - - - - - 27 27
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Transactions with owners - - - - - 27 27
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Retained profit for the year - - - - - 1,450 1,450
Adjustment to prior year losses
on adoption of IFRS 16 - - - - - (193) (193)
Exchange differences on translation
of overseas operations - - - - 19 - 19
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
Total comprehensive expense
for the period - - - - 19 1,257 1,276
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
At 31 December 2019 3,115 6,800 617 29,778 (176) (44,976) (4,842)
------------------------------------ -------- -------- ------------ --------- ------------ ----------- --------
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
as at 31 December 2019
2019 2018
Notes GBP'000 GBP'000
----------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Intangible assets 4,671 5,422
Property, plant and equipment 1,182 232
Deferred tax assets 3 3
--------- ---------
5,856 5,657
--------- ---------
Current assets
Inventories 140 210
Trade and other receivables 3,468 2,391
Current tax assets - 12
Cash and cash equivalents 1,144 1,269
--------- ---------
4,752 3,882
Liabilities
Current liabilities
Financial liabilities - borrowings 1,520 1,100
Trade and other payables 4,466 4,287
Provisions for other liabilities and charges - 367
Lease liabilities - current 139 -
--------- ---------
6,125 5,754
--------- ---------
Net current liabilities (1,373) (1,872)
--------- ---------
Non-current liabilities
Financial liabilities - borrowings 8,030 9,550
Lease liabilities - non-current 1,046 -
Deferred tax liabilities 249 380
9,325 9,930
--------- ---------
Net assets (4,842) (6,145)
----------------------------------------------- ------ --------- ---------
Equity attributable to owners of the parent
Ordinary shares 9 3,115 3,115
Share premium account 9 6,800 6,800
Capital redemption reserve 9 617 617
Merger reserve 29,778 29,778
Translation reserve (176) (195)
Retained earnings (44,976) (46,260)
--------- ---------
Total equity (4,842) (6,145)
----------------------------------------------- ------ --------- ---------
CONSOLIDATED GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2019
2019 2018
Notes GBP'000 GBP'000
------------------------------------------- ------ -------- ---------
Cash flows from operating activities
Cash generated from operations 8 2,423 2,039
Interest paid (393) (295)
Taxation paid (38) (25)
-------- ---------
Net cash from operating activities 1,992 1,719
-------- ---------
Cash flows from investing activities
Interest received 2 4
Proceeds from sale of property, plant and
equipment - 3
Purchase of property, plant and equipment (61) (88)
Expenditure on capitalised development
costs (985) (728)
Net cash used in investing activities (1,044) (809)
-------- ---------
Cash flows from financing activities
Net cash used in repayment of financing
activities 10 (1,100) (850)
Net cash used in financing activities (1,100) (850)
-------- ---------
Net (decrease)/increase in cash and cash
equivalents and overdrafts (152) 60
Effect of foreign exchange rate changes 10 27 (40)
-------- ---------
Cash and cash equivalents and overdrafts
at 1 January 1,269 1,249
Cash and cash equivalents and overdrafts
at 31 December 1,144 1,269
-------- ---------
Net debt comprises:
Cash and cash equivalents and overdrafts 1,144 1,269
Borrowings (9,550) (10,650)
-------- ---------
Net debt at 31 December 10 (8,406) (9,381)
------------------------------------------- ------ -------- ---------
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2019
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 results announcement was approved for issue at close of
business on 29 April 2020.
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 IFRS 16 Leases became
effective. The Group has adopted the modified retrospective
approach to implementation. Accordingly, comparative periods have
not been restated.
From 1 January 2019, at inception of a contract, the Group
assesses whether it is, or contains, a lease. A contract is, or
contains, a lease if it conveys the right to control the use of an
identified asset for a time in exchange for consideration. A
contract conveys the right to control the use of an asset, if the
Group receives substantially all the economic benefits from its use
over time and controls how it is used.
At inception or on reassessment of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component based on their relative
stand-alone prices.
For contracts entered into before 1 January 2019, the Group
determined whether the arrangement was or contained a lease using
the same assessment.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right of-of-use asset is
initially measured at cost. Cost comprises the initial amount of
the lease liability, adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of its useful life or the end of the lease term. Useful
life is determined on the same basis as other property and
equipment.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease, or if
that cannot be determined, the Group's incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as the
discount rate. The lease liability is measured at amortised cost
using the effective interest method.
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases that have a term of 12 months or less.
The Group recognises the payments associated with these leases as
an expense on a straight-line basis over the lease term.
Under the previous policy none of the Group's leases were
classified as finance leases. Payments made under operating leases
were recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received were recognised as an
integral part of the total lease expense, over the term of the
lease.
The cumulative impact of the adoption of IFRS 16 has been
accounted for as an adjustment to equity. For leases classified as
operating leases in 2018 the Group did not recognise related assets
or liabilities, and instead charged the cost to the income
statement on a straight-line basis over the period of the lease and
disclosed its total commitment in the notes to the financial
statements. Instead of recognising an operating expense for its
operating lease payments, the Group has recognised GBP42,000
interest on its lease liabilities and GBP134,000 amortisation on
its right of use assets. Adjusted EBITDA has increased by
GBP167,000 resulting from the reclassification of operating lease
cost. It has not had a material effect on the Group's income or net
assets.
The financial information contained in these condensed financial
statements does not constitute the Company's statutory accounts
within the meaning of the Companies Act 2006. Statutory accounts
for the years ended 31 December 2019 and 31 December 2018 have been
reported on, without qualification or drawing attention to any
matters by way of emphasis, by the Company's auditor and do not
contain a statement under s.498 (2) or s.498 (3) of the Companies
Act 2006. Whilst the financial information included in this Annual
Financial Report 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.
In order to comply with the regulatory requirement to include
un-edited text in this Annual Financial Report Announcement, page
and note references refer to page and note numbers in the Annual
Financial Report 2019.
The statutory accounts for the year ended 31 December 2019,
prepared under IFRS, will be delivered to the Registrar in due
course. The Group's principal accounting policies as set out in the
2019 statutory accounts have been applied consistently in all
material respects.
GOING CONCERN
The directors are required to make an assessment of the
Company's and the Group's ability to continue to trade as a going
concern.
At 31 December 2019 the Group's net debt was GBP8.4 million
(2018: GBP9.4 million) comprising net cash of GBP1.1 million (2018:
GBP1.3 million) and the drawn down RCF of GBP9.5 million (2018:
GBP10.7 million).
We maintain a good relationship with our bank and on 10 February
2020 a 12-month extension to the current GBP9.5 million loan
agreement was signed. The revision secures the facility until 30
November 2021 with banking covenants and a repayment schedule in
place.
In order to assess the appropriateness of preparing the
financial statements on a going concern basis, management prepared
detailed projections of expected cash flows for a period of 3 years
for review by the Board. These projections include the impact of
margin improvement strategies and sales growth.
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 improvement of gross margin.
Additionally, it considered sensitivities regarding the ongoing
revenue and cost assumptions, including the impact of Brexit and
extreme and unlikely consequences resulting from the Coronavirus
(Covid-19) outbreak.
All the Group's employees and contractors are currently working
from home, unless it is essential that they do otherwise. There has
been minimal disruption, as remote working practices have been
extended and adopted. "Virtual" trade shows have been held to
replace those cancelled and significant new orders have been won
since the restrictions were announced. Interest in our products
that permit remote working is high.
The Board have concluded that the Group will have sufficient
resources to meet its liabilities for the foreseeable future and
therefore the Group and hence the Company remains 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 Systems GBP'000
----------------------------------------------- --------------- -------- ---------
Year to 31 December 2019
Broadcast 11,200 - 11,200
Total revenue 11,200 - 11,200
--------------- -------- ---------
Adjusted EBITDA 4,418 (653) 3,765
Depreciation (238) - (238)
Amortisation of acquired intangibles (889) - (889)
Amortisation of capitalised development
costs (847) - (847)
Exchange (losses)/gains (78) 7 (71)
Finance costs (42) (351) (393)
Finance income 2 - 2
Intercompany finance income/(costs) 128 (128) -
--------------- -------- ---------
Profit/(loss) before taxation 2,454 (1,125) 1,329
Taxation 84 (2) 82
--------------- -------- ---------
Profit/(loss) for the year being attributable
to owners of the parent 2,538 (1,127) 1,411
Year to 31 December 2018
Broadcast 9,174 - 9,174
Total revenue 9,174 - 9,174
--------------- -------- ---------
Adjusted EBITDA 2,867 (397) 2,470
Depreciation (127) - (127)
Amortisation of acquired intangibles (1,419) - (1,419)
Amortisation of capitalised development
costs (828) - (828)
Non-recurring items (3,858) 3,554 (304)
Exchange (losses)/gains 46 (18) 28
Finance costs - (296) (296)
Finance income 3 1 4
Intercompany finance income/(costs) 118 (118) -
--------------- -------- ---------
(Loss)/profit before taxation (3,198) 2,726 (472)
Taxation 254 (1) 253
--------------- -------- ---------
Profit/(loss) for the year being attributable
to owners of the parent (2,944) 2,725 (219)
----------------------------------------------- --------------- -------- ---------
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.
2019 2018
Total Total
GBP'000 GBP'000
---------------- ---------- ----------
By market
UK & Europe 5,272 4,820
North America 982 585
Latin America 1,602 513
Middle East
and Africa 3,114 2,931
Asia / Pacific 230 325
11,200 9,174
---------------- ---------- ----------
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.
2019 2018
GBP'000 GBP'000
---------------------- --------- ---------
By division:
Pebble Beach Systems 4,977 5,308
Central (9,819) (11,453)
(4,842) (6,145)
---------------------- --------- ---------
4. OPERATING PROFIT
The following items have been included in arriving at the
operating profit for the continuing business:
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------
Depreciation of property, plant and equipment 238 127
Amortisation of acquired intangibles 889 1,419
Operating lease rentals - 167
Exchange losses/(gains) charged /(credited)
to profit and loss 71 (28)
Research and development expenditure expensed
in the year which includes: 1,298 1,222
* Amortisation of capitalised development costs 847 828
--------------------------------------------------------- ---------- ---------
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:
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------
Rationalisation and Redundancy costs - 358
Provision for former executive debt - (54)
- 304
--------------------------------------------------------- ---------- ---------
5. FINANCE COSTS - NET
2019 2018
GBP'000 GBP'000
------------------------------------------- ---------- ----------
Interest expense for bank borrowing 351 296
Interest expense for leasing arrangements 42 -
Finance costs 393 296
Finance income (2) (4)
Finance costs - net 391 292
------------------------------------------- ---------- ----------
Finance income is derived from cash held on deposit.
6. INCOME TAX EXPENSE
2019 2018
GBP'000 GBP'000
--------------------------------------- --------- ---------
Current tax
UK corporation tax - 27
Foreign tax - current year 50 -
Adjustments in respect of prior years - (11)
--------------------------------------- --------- ---------
Total current tax 50 16
--------------------------------------- --------- ---------
Deferred tax
UK corporation tax (132) (269)
Adjustments in respect of prior years - -
--------------------------------------- --------- ---------
Total deferred tax (132) (269)
--------------------------------------- --------- ---------
Total taxation (82) (253)
--------------------------------------- --------- ---------
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
(2018: 17 per cent).
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.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
2019 2018
Weighted Weighted
average average Earnings
number Earnings number per
Earnings of shares per share Earnings of shares share
GBP'000 '000s pence GBP'000 '000s pence
----------------------------- --------- ----------- ----------- --------- ----------- ----------
Basic earnings per share
Profit/(loss) attributable
to continuing operations 1,411 1.1p (219) (0.2)p
Profit attributable
to discontinued operations 39 0.0p 195 0.2p
----------------------------- --------- ----------- ----------- --------- ----------- ----------
Basic earnings/(loss)
per share 1,450 124,477 1.1p (24) 124,477 0.0p
----------------------------- --------- ----------- ----------- --------- ----------- ----------
Diluted earnings per
share
Profit/(loss) attributable
to continuing operations 1,411 1.1p (219) (0.2)p
Profit attributable
to discontinued operations 39 0.0p 195 0.2p
----------------------------- --------- ----------- ----------- --------- ----------- ----------
Diluted earnings/(loss)
per share 1,450 124,577 1.1p (24) 124,477 0.0p
----------------------------- --------- ----------- ----------- --------- ----------- ----------
Potential ordinary shares were non-dilutive in prior years
because they would decrease the loss per share from continuing
operations.
Adjusted earnings
The directors believe that adjusted EBITDA, 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 reconciliation between reported and underlying earnings and
basic earnings per share is shown below:
2019 2018
----------------------------------------- ------------------- --- ---------------
Earnings Earnings
GBP'000 GBP'000
Pence Pence
Reported profit/(loss) per share
- continuing operations 1,411 1.1p (219) (0.2)p
Depreciation 198 0.2p 105 0.1p
Amortisation of acquired intangibles
after tax 738 0.6p 1,178 0.9p
Amortisation of capitalised development
costs 703 0.6p 687 0.6p
Non-recurring items after tax - 0.0p 245 0.2p
Exchange losses/(gains) 58 0.0p (23) 0.0p
--------- ------- ----------- ----------
Adjusted profit per share - continuing
operations 3,108 2.5p 1,973 1.6p
----------------------------------------- --------- ------- ----------- ----------
8. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of loss before taxation to net cash flows from
operating activities.
2019 2018
GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Profit/(loss) before tax - continuing operations 1,329 (472)
Profit before tax - discontinued operations 39 184
----------------------------------------------------- --------- ---------
Total profit/(loss) before tax 1,368 (288)
Depreciation of property, plant and equipment 238 127
Loss on disposal of property, plant and equipment 1 10
Amortisation and impairment of development costs 847 828
Amortisation and impairment of acquired intangibles 889 1,419
Share-based payment expense 27 -
Finance income (2) (4)
Finance costs 393 295
Decrease in inventories 70 15
(Increase)/decrease in trade and other receivables (1,077) 848
Increase/(decrease) in trade and other payables 36 (811)
Decrease in provisions (367) (400)
----------------------------------------------------- --------- ---------
Net cash generated from operating activities 2,423 2,039
----------------------------------------------------- --------- ---------
9. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL REDEMPTION RESERVE
Number of Share Share Premium Capital Total
shares Capital redemption
GBP'000 reserve
'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- --------- -------------- ------------ ---------
At 1 January 2019 124,603 3,115 6,800 617 10,532
Share issues - - - - -
At 31 December 2019 124,603 3,115 6,800 617 10,532
--------------------- ---------- --------- -------------- ------------ ---------
10. NET FUNDS
Reconciliation of decrease in cash and cash equivalents to
movement in net cash:
Net cash and Other Total
cash equivalents borrowings net cash
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------------ ------------ ----------
At 1 January 2019 1,269 (10,650) (9,381)
Cash flow for the year before financing 948 - 948
Movement in borrowings in the year (1,100) 1,100 -
Exchange rate adjustments 27 - 27
Cash and cash equivalents at 31 December
2019 1,144 (9,550) (8,406)
------------------------------------------ ------------------ ------------ ----------
11. POST BALANCE SHEET EVENTS
On 10 February 2020 an extension of the current loan agreement
was signed with our bank. The revision secures the facility until
30 November 2021 with banking covenants and a repayment schedule in
place. In order to mitigate potential cash flow risks caused by
uncertainties relating to Coronavirus (Covid-19), management made a
formal application for a Government capital repayment holiday. On
22 April 2020, our bank approved the deferment of the next loan
repayment of GBP380,000 due on 30 June 2020. Furthermore, the bank
has indicated their support should a deferment of the September
repayment be considered necessary, as global uncertainties around
Coronavirus (Covid-19) become clearer.
On 23 March 2020 the UK Government announced its "Stay at Home"
policy to help fight the Coronavirus (Covid-19) outbreak in the UK.
Similar measures have been announced in countries around the world
at different times.
All the Group's employees and contractors are currently working
from home, unless it is essential that they do otherwise. There has
been minimal disruption as remote working practices have been
extended and adopted. "Virtual" trade shows have been held to
replace those cancelled and significant new orders have been won
since the restrictions were announced. Interest in our products
that permit remote working is high.
Management has considered the impact of the global Coronavirus
(Covid-19) outbreak on the Group's financial statements. They have
reviewed the forecasts and projections, including extremely
unlikely scenarios, used in concluding that the Group remains a
going concern; they have reviewed the assumptions relating to the
valuation of intangible assets and investments; they have reviewed
the Group's expected credit losses. Management has concluded that
there is no material impact on the Group's financial statements for
2019.
In the Spring Budget 2020, the Government announced that from 1
April 2020 the corporation tax rate would remain at 19 per cent
(rather than reducing to 17 per cent, as previously enacted). This
new law was substantively enacted on 17 March 2020. As the proposal
to keep the rate at 19 per cent had not been substantively enacted
at the balance sheet date, its effects are not included in these
financial statements. However, it is likely that the overall effect
of the change, had it been substantively enacted by the balance
sheet date, would be to reduce the tax credit for the period by
GBP30,000 and to increase the deferred tax liability by
GBP30,000.
The Board is pleased to confirm that following the publication
of its audited results for the year ended 31 December 2019, the
annual report and financial statements will be posted to
shareholders on 27 May 2020 and a copy will also be 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 SEMFUUESSELL
(END) Dow Jones Newswires
April 30, 2020 02:00 ET (06:00 GMT)
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