TIDMPEB
RNS Number : 1309X
Pebble Beach Systems Group PLC
26 August 2020
Pebble Beach Systems Group plc
Results for the half year ended 30 June 2020
Pebble Beach Systems Group plc, 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 unaudited results for the half year ended
30 June 2020.
Headlines
-- Period characterised by the global challenges created by the COVID-19 pandemic
-- Orders received in the period of GBP3.9m (H1 2019: GBP5.2m)
-- Revenue in the period of GBP4.5m (H1 2019: GBP5.6m)
-- Adjusted EBITDA in the period of GBP1.5m (H1 2019: GBP2.0m)
-- Adjusted EBITDA 34% of revenue (H1 2019: 35%)
-- Reported profit before tax GBP0.7m (H1 2019: GBP0.7m)
-- Cash generated from operations in the period GBP1.4m (H1 2019: GBP0.8m)
-- Net debt further reduced as at 30 June 2020 GBP7.8m (31
December 2019: GBP8.4m) pre IFRS 16
*Adjusted EBITDA, a non-GAAP measure, is EBITDA before
non-recurring items and foreign exchange gains.
John Varney, Non-Executive Chairman of Pebble Beach Systems
Group plc, said:
"Despite the very challenging global environment, the Company
continues to operate at full capacity, and we remain confident on
the long-term growth opportunities for the Company. We continue to
trade profitably and maintain our budgeted investment into new
technology as we continue to innovate our suite of products.
Given the circumstances created by COVID-19, it is not a
surprise that order intake in the period was lower than we had
originally anticipated principally as a result of customer orders
being delayed. Given the impact of COVID-19, customers have been
understandably cautious about commitments to implement larger scale
projects. As a board we believe that this is merely delaying
planned large scale projects rather than these potential contracts
being lost. We are not seeing evidence of the business being
impacted by the widely reported delays to content creation in the
Broadcast market, and our technology is in the content delivery
chain rather than that of content creation. These factors, combined
with the continued growth in our pipeline, means that the Board
remains confident on the Company's market positioning and long-term
opportunities."
- ends -
For further information please contact:
+44 (0) 75 55 59
Peter Mayhead - Chief Executive 36 02
finnCap (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 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
2020 has to date proved to be a year that no one could have
predicted. Due to the challenges created by COVID-19 all businesses
have had to adapt their approach to their operations and
interaction with customers as well as reassessing investment
decisions. In these circumstances it is no surprise to see a
cautious approach to commitments to larger scale projects and as a
result we have seen a reduction in order intake in the period which
has led to revenues for H1 being lower than we had originally
budgeted. However, we have confidence in our pipeline so that
overall, we anticipate order intake for 2020 as a whole to only be
down c.10% year on year.
We have seen gross margin gradually improve and our net debt
position continues to reduce due to the highly cash generative
nature of our business. Our net debt stood at just under GBP8.0
million (pre IFRS 16) as at 31 July 2020.
Management recognise the importance of maintaining our
technological expertise and global leadership and thus expects to
maintain current levels of investment in innovation and
distribution for the foreseeable future. This will mean that the
level of our R&D as a percentage of revenue will look higher
than normal, but this is an investment for the future and one that
the Board is happy to make.
During the pandemic our operational model demonstrated high
levels of resilience. There was a seamless transition to home
working with over 95% of all staff across all our hubs now working
remotely full time. The Company did not take advantage of the
furlough schemes offered by the Government and no staff have been
laid off, both achievements of which we are proud.
Adjustments to our annual operating plan have been made to
ensure that the Company is able to protect full-year earnings, and
ensure adequate liquidity, without disrupting our services to
customers or negatively impacting the longer-term growth prospects
of the business.
John Varney
Non-Executive Chairman
CHIEF EXECUTIVE'S STATEMENT
I am delighted to say that every member of the Pebble
organisation has upheld our Company Values, which are to
-- 'Be the expert' - We are proud of our expertise and
enthusiastic about sharing knowledge. We are always learning;
-- 'Find a solution' - We are agile and versatile. We will not give up;
-- 'Do the right thing' - We operate with integrity, openness
and honesty to earn and deserve trust;
-- 'Success through partnership' - We are passionate about the
power of collaborative, supportive relationships;
-- 'Every Pebble matters' - We embrace talent, treat each other
with respect, and work to build a friendly, supportive
environment.
As a result of ensuring we always work with our Company Values
in mind, we have built stronger and deeper relationships with our
customers through these challenging times.
Thanks to the considerable efforts of our staff we have
continued to operate 100% effectively throughout the pandemic. We
have remained fully capable of delivering ongoing and new projects
and the results released today are a validation of the Company's
strategy and is testament to the quality of our team.
A particular operational achievement during H1 is that a review
undertaken at the beginning of the year on the progress against
departmental goals showed that we are over 90% on track to achieve
these goals within their respective timelines, despite the current
disruption of the pandemic.
At this time management continue to believe that the virus does
not necessitate any change to our strategy for growth, nevertheless
given the impact COVID-19 continues to have across the world, we
will continue to monitor the situation very closely.
Orders received in the period decreased 25.6% to GBP3.9 million
(H1 2019: GBP5.2 million). Revenue is down by 19.7% to GBP4.5
million (H1 2019: GBP5.6 million). Adjusted EBITDA for the business
of GBP1.5 million (H1 2019: GBP2.0 million) is 34% of revenue (H1
2019: 35% of revenue). Reported profit before tax for the period
was GBP0.7 million (H1 2019: GBP0.7 million). Cash generated from
operations remains strong at GBP1.4 million (H1 2019: GBP0.8
million). Cash conversion, defined as cash from operations divided
by Adjusted EBITDA, is strong at 91.8% (H1 2019: 42.7%).
Financial Results
Pebble Beach Systems achieved H1 2020 revenue of GBP4.5 million
(H1 2019: GBP5.6 million).
Management is currently confident in the outlook for H2 2020,
with a backlog of orders of GBP4.1 million at 30 June 2020 (H1
2019: GBP5.2 million) and a growing pipeline.
Adjusted EBITDA was GBP1.5 million in H1 2020 (H1 2019: GBP2.0
million) before the deduction of depreciation and amortisation
costs of GBP0.7 million (H1 2019: GBP1.1 million).
In the first half, Central costs were GBP0.2 million (H1 2019:
GBP0.3 million). Reported profit before tax was GBP0.7 million (H1
2019: GBP0.7 million).
The available Revolving Credit Facility (RCF) as at 30 June 2020
was GBP9.2 million (H1 2019: GBP10.1 million) which had been fully
drawn down. Net debt at 30 June 2020 (pre IFRS 16) was reduced to
GBP7.8 million (31 December 2019: GBP8.4 million) as we continue
with our strategy to pay down our debt whilst also investing in
ongoing innovation and distribution. Interest paid on the RCF was
GBP0.2 million (H1 2019: GBP0.2 million). There is no overdraft
facility, which remains unchanged (H1 2019: GBP Nil).
The Company continues to view investment in the development of
new products and services as key to future growth. In the first
half of 2020, Pebble Beach Systems capitalised GBP0.6 million of
development costs (H1 2019: GBP0.5 million) and amortised GBP0.4
million (H1 2019: GBP0.4 million).
Dividends
As in previous years, the Board is not declaring an interim
dividend.
Trading Outlook
2020 had started well for the business, with initial growth in
our pipeline and order intake in line with management
expectation.
The global pandemic has undoubtedly adversely affected the
Broadcast market during the first six months of the year and
continues to do so. Looking forward to the second half, there are
indications that the market in which we operate is likely to remain
flat but not decline.
Although we are seeing a growth in our pipeline, we expect that
it will continue to prove challenging to convert this pipeline into
firm orders due to customers' understandable caution with
commitments with large scale projects. However, our revenue is
being underpinned by SLAs, a higher than usual level of recurring
business from existing customers and our backlog of orders.
Management continue to believe that the virus does not
necessitate any change to our strategy for growth. However, the
ongoing impact of COVID-19 on some segments of our market suggests
this would be a good time to consider some M&A activity.
Peter Mayhead
Chief Executive
For the half year ended 30 June 2020
FINANCIAL REVIEW
Divisions and Markets
For the half year ended 30 June 2020
Continuing Operations
2020 2019 Change
GBP'm GBP'm %
----------------------- ------------ ------------ -------
(Unaudited) (Unaudited)
Pebble Beach Systems 4.5 5.6 -19.7%
-------
Total Revenue 4.5 5.6 -19.7%
----------------------- ------------ ------------ -------
Pebble Beach Systems 1.7 2.3 -24.6%
Central (0.2) (0.3) -33.7%
----------------------- ------------ ------------ -------
Total adjusted EBITDA 1.5 2.0 -23.0%
Pebble Beach Systems has contributed GBP4.5 million of revenue
and GBP1.7 million of adjusted EBITDA in the six months to 30 June
2020.
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 30
June 2020 is GBP3.2 million (2019: 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.
Cash flows
The Group held cash and cash equivalents of GBP1.4 million at 30
June 2020 (H1 2019: GBP1.1 million). Against this are set off debit
balances of GBP Nil (H1 2019: GBP Nil). The table below summarises
the cash flows for the half year.
2020 2019
GBP'million GBP'million
------------------------------------------ ------------ ------------
Cash generated from operating activities 1.4 0.8
Net cash used in investing activities (0.7) (0.4)
Net cash used in financing activities (0.4) (0.6)
Net increase/(decrease) in cash and
cash equivalents 0.3 (0.2)
Cash and cash equivalents at 1 January 1.1 1.3
------------------------------------------ ------------ ------------
Cash and cash equivalents at 30 June 1.4 1.1
------------------------------------------ ------------ ------------
As at 30 June 2020 net debt, excluding the impact of IFRS16, was
GBP7.8 million (cash GBP1.4 million and bank debt of GBP9.2
million). At the end of July 2020, net debt had increased to GBP8.0
million. The Group was using all GBP9.2 million of its available
facilities in June 2020.
No material change in net debt is forecast for the second half
of 2020. A decrease in cash and cash equivalents is forecast as
bank debt is paid down.
A scheduled debt repayment of GBP380,000 was made in March 2020.
In order to mitigate potential cash flow risks caused by
uncertainties relating to 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 loan repayment of GBP380,000 which was due on 30
June 2020 under our current Facility Agreement. Furthermore, the
bank has indicated their support should a deferment of the
September repayment be considered necessary, as global
uncertainties around COVID-19 become clear. Further repayments of
GBP380,000 are due in September and December 2020.
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.
Period Period
Average Average end end
rate rate rate rate
Rate compared to GBP sterling 2020 2019 2020 2019
------------------------------ ------- ------- ------ ------
US dollar 1.261 1.294 1.236 1.273
------------------------------ ------- ------- ------ ------
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 INCOME STATEMENT
for the half year ended 30 June 2020
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 4,486 5,587 11,200
Cost of sales (1,116) (1,377) (2,931)
------------ ------------ -------------
Gross profit 3,370 4,210 8,269
Sales and marketing expenses (901) (1,052) (2,044)
Research and development expenses (605) (717) (1,298)
Administrative expenses (878) (1,030) (2,247)
Foreign exchange gains/(losses) 103 24 (71)
Other expenses (156) (511) (889)
Operating profit 5 933 924 1,720
--------------------------------------------- ------ ------------ ------------ -------------
Operating profit is analysed as:
Adjusted EBITDA 1,515 1,969 3,765
Exchange gains credited/(charged)
to the income statement 103 24 (71)
--------------------------------------------- ------ ------------ ------------ -------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 1,618 1,993 3,694
--------------------------------------------- ------ ------------ ------------ -------------
Depreciation (124) (126) (238)
Amortisation and impairment of acquired
intangibles (156) (511) (889)
Amortisation of capitalised development
costs (405) (432) (847)
Finance costs (195) (210) (393)
Finance income 1 1 2
Profit before tax 739 715 1,329
Tax 6 6 68 82
------------ ------------ -------------
Profit for the period being attributable
to owners of the parent 745 783 1,411
Net result from discontinued operations - 16 39
------------ ------------ -------------
Net result for the period 745 799 1,450
Earnings per share from continuing
and
discontinued operations attributable
to the owners of
the parent during the period
Basic earnings per share
From continuing operations 7 0.6p 0.6p 1.1p
From discontinued operations 0.0p 0.0p 0.0p
------------ ------------ -------------
From profit for the period 0.6p 0.6p 1.1p
--------------------------------------------- ------ ------------ ------------ -------------
Diluted earnings per share
From continuing operations 7 0.6p 0.6p 1.1p
From discontinued operations 0.0p 0.0p 0.0p
------------ ------------ -------------
From profit for the period 0.6p 0.6p 1.1p
--------------------------------------------- ------ ------------ ------------ -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the half year ended 30 June 2020
6 months 6 months Year ended
to 30 to 30 31 December
June 2020 June 2019 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ------------ -------------
Profit for the financial
year 745 799 1,450
Other comprehensive income
- items that may be reclassified
subsequently to profit
or loss:
Exchange differences on
translation of overseas
operations
- continuing operations (49) (3) 19
- discontinued operations - - -
Total profit for the period
attributable to owners
of the parent 696 796 1,469
------------------------------------ ------------ ------------ -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the half year ended 30 June 2020
Capital
Ordinary Share redemption Merger Translation Accumulated
shares premium reserve reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
At 1 January 2020 3,115 6,800 617 29,778 (176) (44,976) (4,842)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
Share based payments:
value of employee
services - - - - - 6 6
Transactions with
owners - - - - - 6 6
Retained profit for
the period - - - - - 745 745
Exchange differences
on translation of
overseas operations - - - - (49) - (49)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
Total comprehensive
income/expense for
the period - - - - (49) 745 696
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
At 30 June 2020
(Unaudited) 3,115 6,800 617 29,778 (225) (44,225) (4,140)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
At 1 January 2019 3,115 6,800 617 29,778 (195) (46,260) (6,145)
Retained profit for
the year - - - - - 799 799
Adjustment to prior
year losses
on adoption of IFRS
16 - - - - - (203) (203)
Exchange differences
on translation of
overseas operations - - - - (3) - (3)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
Total comprehensive
income/expense for
the period - - - - (3) 596 (593)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
At 30 June 2019
(Unaudited) 3,115 6,800 617 29,778 (198) (45,664) (5,552)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
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
income/expense for
the period - - - - 19 1,257 1,276
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
At 31 December 2019
(Audited) 3,115 6,800 617 29,778 (176) (44,976) (4,842)
------------------------ ----------- ---------- ------------ ---------- -------------- -------------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 4,730 4,937 4,671
Property, plant and equipment 1,151 1,253 1,182
Deferred tax assets - 3 3
------------ ------------ ------------
5,881 6,193 5,856
------------ ------------ ------------
Current assets
Inventories 188 238 140
Trade and other receivables 3,344 2,972 3,468
Current tax assets - - -
Cash and cash equivalents 1,395 1,083 1,144
------------ ------------ ------------
4,927 4,293 4,752
Liabilities
Current liabilities
Financial liabilities - borrowings 1,520 1,310 1,520
Trade and other payables 4,437 4,371 4,466
Provisions for other liabilities - - -
and charges
Lease liabilities - current 126 167 139
------------ ------------ ------------
6,083 5,848 6,125
------------ ------------ ------------
Net current liabilities (1,156) (1,555) (1,373)
------------ ------------ ------------
Non-current liabilities
Financial liabilities - borrowings 7,650 8,790 8,030
Lease liabilities - non-current 991 1,107 1,046
Deferred tax liabilities 224 293 249
8,865 10,190 9,325
------------ ------------ ------------
Net liabilities (4,140) (5,552) (4,842)
--------------------------------------------- ------------ ------------ ------------
Equity attributable to owners of
the parent
Ordinary shares 3,115 3,115 3,115
Share premium account 6,800 6,800 6,800
Capital redemption reserve 617 617 617
Merger reserve 29,778 29,778 29,778
Translation reserve (225) (198) (176)
Retained earnings (44,225) (45,664) (44,976)
------------ ------------ ------------
Total equity (4,140) (5,552) (4,842)
--------------------------------------------- ------------ ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the half year ended 30 June 2020
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 8 1,603 1,063 2,423
Interest paid (195) (210) (393)
Taxation paid (16) (13) (38)
------------ ------------ -------------
Net cash from operating activities 1,392 840 1,992
------------ ------------ -------------
Cash flows from investing activities
Interest received 1 1 2
Proceeds from sale of property, plant - - -
and equipment
Purchase of property, plant and equipment (63) (19) (61)
Expenditure on capitalised development
costs (620) (458) (985)
Net cash used in investing activities (682) (476) (1,044)
------------ ------------ -------------
Cash flows from financing activities
Net cash used in repayment of financing
activities (380) (550) (1,100)
Net cash used in financing activities (380) (550) (1,100)
------------ ------------ -------------
Net increase/(decrease) in cash and
cash equivalents 330 (186) (152)
Effect of foreign exchange rate changes (79) - 27
------------ ------------ -------------
Cash and cash equivalents and overdrafts
at 1 January 1,144 1,269 1,269
Cash and cash equivalents and overdrafts
at period end 1,395 1,083 1,144
------------ ------------ -------------
Net debt comprises:
Cash and cash equivalents and overdrafts 1,395 1,083 1,144
Borrowings (9,170) (10,100) (9,550)
------------ ------------ -------------
Net debt at period end (7,775) (9,017) (8,406)
------------------------------------------- ------ ------------ ------------ -------------
The cash and cash equivalents and overdrafts balance comprise
credit balances of GBP1,395,000 (H1 2019: GBP1,083,000) which have
been set off against debit balances of GBP Nil (H1 2019: GBP
Nil).
NOTES TO THE FINANCIAL STATEMENTS
for the half year ended 30 June 2020
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 half year results announcement was approved at close of
business on 25 August 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.
Standards or amendments issued but not yet effective are not
expected to have a material impact on the net assets of the
Group.
The financial information contained in these condensed financial
statements has been computed in accordance with IFRS. However, this
announcement, due to its condensed nature, does not itself contain
sufficient information to comply with IFRS.
Going Concern
The directors are required to make an assessment of the Group's
ability to continue to trade as a going concern.
At 30 June 2020 net debt, excluding the impact of IFRS16, was
GBP7.8 million (H1 2019: GBP9.0 million) comprising net cash of
GBP1.4 million (H1 2019: GBP1.1 million) and bank debt of GBP9.2
million (H1 2019: GBP10.1 million).
We maintain a good relationship with our bank. The bank remains
supportive and has confirmed it would look favourably on a request
for deferment of the September 2020 loan repayment, if required.
The current loan agreement secures the facility until 30 November
2021 with banking covenants and a repayment schedule in place.
Repayments of GBP380,000 are due on 30 September and 31 December
2020 and GBP450,000 on 31 March and 30 June 2021.
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 in 2021 and
beyond.
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, the directors considered sensitivities regarding
the ongoing revenue and cost assumptions, including the estimated
impact of COVID-19 and Brexit. This extended to assumptions
considering extreme and unlikely consequences resulting from the
COVID-19 outbreak.
During the initial period of impact of COVID-19 which coincides
with H1 of our financial year the Group has continued to trade
profitably and generate good levels of operating cash, both
measures performing in line with the Board's expectation. Overheads
in H1 have declined because of reduced travel expense, a temporary
freeze in recruitment and cancellation or postponement until later
in the year of trade shows. There has been no furlough of staff
necessary and we do not envisage this to be needed in the future.
All the Group's employees and contractors are successfully 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 COVID-19 restriction
were announced. Both gross and weighted order pipelines have
increased in value between the end of December 2019 and the end of
July 2020.
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. ACCOUNTING POLICIES
The accounting policies applied are consistent with those of the
annual report and financial statements for the year ended 31
December 2019, as described in those annual report and financial
statements.
Taxes on income in the half year periods are accrued using the
tax rate that would be applicable to expected total annual earnings
on a country by country 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 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 GBP'000 GBP'000
----------------------------------------------- --------------- -------- --------
6 months to 30 June 2020 (Unaudited)
--------------- -------- --------
Total revenue 4,486 - 4,486
--------------- -------- --------
Adjusted EBITDA 1,755 (240) 1,515
Depreciation (124) - (124)
Amortisation and impairment of acquired
intangibles (156) - (156)
Amortisation of capitalised development
costs (405) - (405)
Exchange gains 96 7 103
Finance costs (24) (171) (195)
Finance income 1 - 1
Profit/(loss) before taxation 1,143 (404) 739
Taxation 6 - 6
Profit/(loss) for the period being
attributable to owners of the parent 1,149 (404) 745
----------------------------------------------- --------------- -------- --------
6 months to 30 June 2019 (Unaudited)
--------------- -------- --------
Total revenue 5,587 - 5,587
--------------- -------- --------
Adjusted EBITDA 2,328 (359) 1,969
Depreciation (126) - (126)
Amortisation and impairment of acquired
intangibles (511) - (511)
Amortisation of capitalised development
costs (432) - (432)
Exchange gains 20 4 24
Finance costs (25) (185) (210)
Finance income 1 - 1
Profit/(loss) before taxation 1,255 (540) 715
Taxation 70 (2) 68
Profit/(loss) for the period being
attributable to owners of the parent 1,325 (542) 783
----------------------------------------------- --------------- -------- --------
Year to 31 December 2019 (Audited)
--------------- -------- --------
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
----------------------------------------------- --------------- -------- --------
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.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019
2020 (Unaudited) 2019
(Unaudited) (Audited)
Total Total Total
GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- -------------
By market
UK & Europe 2,532 2,807 5,272
North America 276 222 982
Latin America 339 683 1,602
Middle East 1,118 1,720 3,114
Asia / Pacific 221 155 230
4,486 5,587 11,200
---------------- ------------- ------------- -------------
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.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------- ------------ ------------ -------------
By division:
Pebble Beach Systems 5,404 4,935 4,977
Central (9,544) (10,487) (9,819)
(4,140) (5,552) (4,842)
---------------------- ------------ ------------ -------------
5. OPERATING PROFIT
The following items have been included in arriving at the
operating profit for the continuing business:
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------ ------------ -------------
Depreciation of property, plant and equipment 124 126 238
Amortisation of acquired intangibles 156 511 889
Exchange (gains)/losses (credited)/charged
to profit and loss (103) (24) 71
Research and development expenditure
in the year which includes: 605 717 1,298
* Amortisation of capitalised development costs 405 432 847
----------------------------------------------------------- ------------ ------------ -------------
6. INCOME TAX EXPENSE
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ -------------
Current tax
UK corporation tax - - -
Foreign Tax - current year 16 19 50
Adjustments in respect of prior years - - -
--------------------------------------- ------------ ------------ -------------
Total current tax 16 19 50
--------------------------------------- ------------ ------------ -------------
Deferred tax
UK corporation tax (22) (87) (132)
Total deferred tax (22) (87) (132)
--------------------------------------- ------------ ------------ -------------
Total taxation (6) (68) (82)
--------------------------------------- ------------ ------------ -------------
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. Deferred tax
has been provided for at the rate of 19 per cent (2019: 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.
6 months to 30 June 2020 (Unaudited)
Weighted
average Earnings
number per share
Earnings of shares pence
GBP'000 '000s
-------------------------------------- ------------ ------------- ------------
Basic earnings per share
Profit attributable to continuing
operations 745 0.6p
Profit attributable to discontinued
operations - 0.0p
-------------------------------------- ------------ ------------- ------------
Basic earnings per share 745 124,477 0.6p
-------------------------------------- ------------ ------------- ------------
Diluted earnings per share
Profit attributable to continuing
operations 745 0.6p
-------------------------------------- ------------ ------------- ------------
Profit attributable to discontinued
operations - 0.0p
-------------------------------------- ------------ ------------- ------------
Diluted earnings per share 745 126,564 0.6p
-------------------------------------- ------------ ------------- ------------
Year ended 31 December 2019
(Audited)
Weighted
average Earnings
number per share
Earnings of shares pence
GBP'000 '000s
-------------------------------------- ----------- ------------ ------------
Basic earnings per share
Profit attributable to continuing
operations 1,411 1.1p
Profit attributable to discontinued
operations 39 0.0p
-------------------------------------- ----------- ------------ ------------
Basic earnings per share 1,450 124,477 1.1p
-------------------------------------- ----------- ------------ ------------
Diluted earnings per share
Profit attributable to continuing
operations 1,411 1.1p
-------------------------------------- ----------- ------------ ------------
Profit attributable to discontinued
operations 39 0.0p
-------------------------------------- ----------- ------------ ------------
Diluted earnings per share 1,450 124,577 1.1p
-------------------------------------- ----------- ------------ ------------
6 months to 30 June 2019
(Unaudited)
Weighted
average Earnings
number per
Earnings of shares share
GBP'000 '000s pence
------------------------------------- ------------------------- ------------ -----------
Basic earnings per share
Profit attributable to continuing
operations 783 0.6p
Profit attributable to discontinued
operations 16 0.0p
------------------------------------- ------------------------- ------------ -----------
Basic earnings per share 799 124,477 0.6p
------------------------------------- ------------------------- ------------ -----------
Diluted earnings per share
Profit attributable to continuing
operations 783 0.6p
Profit attributable to discontinued
operations 16 0.0p
------------------------------------- ------------------------- ------------ -----------
Diluted earnings per share 799 124,577 0.6p
------------------------------------- ------------------------- ------------ -----------
Adjusted earnings
The directors believe that adjusted EBITDA 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:
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
Total Total Total
(Unaudited) (Unaudited) (Audited)
Earnings Earnings Earnings
GBP'000 Pence GBP'000 Pence GBP'000 Pence
------------------------------------------ -------- ------- -------- ------ -------- ------
Reported earnings per share - continuing
operations 745 0.6p 783 0.6p 1,411 1.1p
Depreciation after tax 100 0.1p 105 0.1p 198 0.2p
Amortisation of acquired intangibles
after tax 126 0.1p 424 0.3p 738 0.6p
Amortisation of capitalised development
costs after tax 328 0.3p 359 0.3p 703 0.6p
Exchange (gains)/losses after tax (83) (0.1)p (19) 0.0p 58 0.0p
-------- ------- -------- ------ -------- ------
Adjusted earnings per share - continuing
operations 1,216 1.0p 1,652 1.3p 3,108 2.5p
------------------------------------------ -------- ------- -------- ------ -------- ------
8. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of profit before taxation to net cash flows from
operating activities.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------ ------------ -------------
Profit before tax - continuing operations 739 715 1,329
Profit before tax - discontinued operations - 16 39
----------------------------------------------- ------------ ------------ -------------
Total profit before tax 739 731 1,368
Depreciation of property, plant and equipment 124 126 238
Loss on disposal of property, plant and
equipment - - 1
Amortisation and impairment of development
costs 405 432 847
Amortisation and impairment of acquired
intangibles 156 511 889
Share based payment expense 6 - 27
Finance income (1) (1) (2)
Finance costs 195 210 393
(Increase)/decrease in inventories (48) (28) 70
Decrease/(increase) in trade and other
receivables 124 (581) (1,077)
(Decrease)/increase in trade and other
payables (97) (137) 36
Decrease in provisions - (200) (367)
----------------------------------------------- ------------ ------------ -------------
Net cash generated from operating activities 1,603 1,063 2,423
----------------------------------------------- ------------ ------------ -------------
9. NET FUNDS
Reconciliation of change in cash and cash equivalents to
movement in net cash:
Net cash and Other borrowings Total net
cash equivalents GBP'000 cash
GBP'000 GBP'000
------------------------------------------- ------------------ ----------------- ----------
At 1 January 2020 1,144 (9,550) (8,406)
Cash flow for the period before financing 710 - 710
Movement in borrowings in the period (380) 380 -
Exchange rate adjustments (79) - (79)
------------------------------------------- ------------------ ----------------- ----------
Cash and cash equivalents at 30 June
2020 (Unaudited) 1,395 (9,170) (7,775)
------------------------------------------- ------------------ ----------------- ----------
At 1 January 2019 1,269 (10,650) (9,381)
Cash flow for the period before financing 364 - 364
Movement in borrowings in the period (550) 550 -
Exchange rate adjustments - - -
------------------------------------------- ------------------ ----------------- ----------
Cash and cash equivalents at 30 June
2019 (Unaudited) 1,083 (10,100) (9,017)
------------------------------------------- ------------------ ----------------- ----------
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 (Audited) 1,144 (9,550) (8,406)
------------------------------------------- ------------------ ----------------- ----------
Ends
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END
IR BUGDIIDDDGGU
(END) Dow Jones Newswires
August 26, 2020 02:00 ET (06:00 GMT)
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