REG - Pebble Beach Sys Grp - Final Results
Pebble Beach Systems Group plc
Results for the year ended 31 December 2018
Pebble Beach Systems Group plc, a leading global software business specialising in solutions for playout automation and content serving customers in the broadcast markets, today announces its final results for the year ended 31 December 2018.
Financial Headlines
2018
2017
Order Intake
£10.8m
£10.5m
Revenues
£9.2m
£10.3m
Gross Margin
£6.7m
£6.5m
73%
63%
Adjusted EBITDA*
% of Revenues
£2.5m
27%
£0.5m
5%
Adjusted earnings/(loss) per share*
1.6p
(0.2)p
Net cash inflow from operating activities
£1.7m
£(2.6)m
Headlines
· Full year results ahead of management expectations
· Order intake and outlook for 2019 strong
· Gross margin improved materially to 73% (2017: 63%)
· Adjusted* EBITDA improved materially to £2.5 million (2017: £0.5 million)
· Net cash inflow from operating activities improved materially to £1.7m (2017: £2.6m outflow)
· Extension to the bank credit facility until 30 November 2020, providing a stable capital base
· Net debt reduced from £10.3 million to £9.4 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:
"This is an exciting time for Pebble Beach Systems as the broadcast industry adapts to the opportunities presented by the expansion in audience and platforms, underpinned by strong continuing growth in advertising revenues. Pebble Beach Systems is now well-positioned to deliver solutions to the global broadcast market as it invests in channel and content delivery infrastructure and systems.
With significant improvements in our profitability and operating cash generation over FY17, we go into 2019 with a strong order backlog and will improve our financial position further as broadcasters invest to take advantages of increasing audience numbers and advertising spend."
- ends -
For further information please contact:
John Varney, Non-Executive Chairman
+44 (0) 75 55 59 36 02
Shaun Dobson / James White
N+1 Singer
+44 (0) 20 74 96 30 00
The Company is quoted on the LSE AIM market (PEB.L). More information can be found at www.pebbleplc.com.
About Pebble Beach Systems
Pebble Beach Systems is a world leader in automation, channel in a box, integrated and virtualised playout technology, with scalable products designed for highly efficient multichannel transmission as well as complex news and sports television. Installed in more than 70 countries and with proven systems ranging from single up to over 150 channels in operation, Pebble Beach Systems offers open, flexible systems, which encompass ingest and playout automation, and complex file-based workflows. The company trades in the US as Pebble Broadcast Systems.
Forward-looking statements
Certain statements in this announcement are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast.
CHAIRMAN'S STATEMENT
Introduction
We delivered a strong financial performance despite market conditions throughout 2018 being challenging as broadcast customers assessed how best to invest in the evolving technologies of IP and cloud orientated infrastructures whilst maintaining their significant historical investment into traditional proprietary infrastructure.
The restructuring of Pebble Beach Systems is now complete and we have a clear mission, focussed on growth and a cost base structured to ensure ongoing profitability and cash generation.
Pebble Beach Systems' mission is to support broadcasters as they adapt to compete with new entrants in the video media space by providing solutions to support their transition from traditional broadcast infrastructure to more flexible IP-based technologies.
Financial Results
Order intake for the full year of £10.8 million is above the previous year (2017: £10.5 million). This includes two significant orders as announced in November 2018.
The first order was from PRO TV, the largest commercial broadcaster in Romania, who chose Pebble Beach Systems' solutions to upgrade its entire playout operations. The order value was £1.0 million, and project commission started in November 2018 ready for an on air date in early 2019.
The second order was from tpc Switzerland AG, the foremost broadcast service provider in Switzerland. This order, also with a value of £1.0 million, is for a new, state of the art, IP-based facility which is currently under construction in Zürich. The contract was finalised in November 2018 and the new facility is scheduled to open in the autumn of 2019.
As expected, revenue for 2018 of £9.2 million (2017: £10.3 million) was down on 2017 as a result of focussing on high margin business. Despite the slightly reduced revenue, overall gross margin grew in 2018 to £6.7 million (73%) (2017: £6.5 million (63%)).
The improved margin, combined with reduced overheads resulting from the restructure, has resulted in an Adjusted EBITDA of £2.5m in 2018 (2017: £0.5 million) before non-recurring items, depreciation and amortisation of £2.7 million are deducted.
Net finance costs were slightly reduced in 2018 reflecting the Group's pay-down of some of its revolving credit facility ("RCF") and overdraft being offset by a higher rate of 3.30% (2017: 2.40%). The available RCF as at 31 December 2018 was brought down to £10.7 million, all of which had been drawn fully down (2017: £15.0 million, of which £11.5 million had been fully drawn down). Interest paid on the RCF was £0.3 million (2017: £0.3 million).
Liquidity risk continued to be reduced, with combined secured bank loans and trade and other payables being further reduced by £1.0 million from £16.3 million in 2017 to £15.3 million at the end of 2018.
The Company continues to view investment in the development of new products and services as key to future growth. In 2018 Pebble Beach Systems capitalised £0.7 million of development costs (amortised £0.8 million), (2017: £0.8 million) (amortised £0.7 million).
Going Concern
The directors are required to make an assessment of the Company's and Group's ability to continue to trade as a going concern.
At 31 December 2018 net debt was £9.4 million (2017: £10.2 million) comprising net cash of £1.3 million (2017 £1.3 million) and the drawn down RCF of £10.7 million (2017: £11.5 million).
We maintain a good relationship with our bank and on 27 March 2019 an extension of the current loan agreement was signed with our bank. The revision secures the facility until 30 November 2020 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 have prepared detailed projections of expected cash flows. These projections include the continued impact of cost reductions implemented in 2017 and 2018, margin improvement strategies and sales growth in 2019.
As part of the review, the Board considered sensitivities with regards to the timing of revenue growth coming from the transition in the broadcast industry from SDI to IP platforms. It looked at sensitivities regarding the recovery of gross margin following the completion of the Harmonic OEM. Finally, it considered sensitivities regarding the cost reductions.
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.
XG Technology Inc.
In December 2018 the Board were pleased to report that following negotiations a resolution was reached with XG Technology Inc. ("XG") which concludes the ongoing dispute, last reported in our 2018 half year results. As a result the formal process to recover sums from XG was concluded and a mutual release signed to ensure no further liabilities are due by either party.
Board changes
Two appointments were made to the Board during 2018.
As previously announced, Peter Mayhead was appointed as Group CEO on 1 January 2018 and Graham Pitman was appointed to the Board as Non-Executive Director on 6 April 2018.
Trading Outlook
With significant improvements in our profitability and operating cash generation over FY17, as we go into 2019, we will improve our financial position further as broadcasters invest to take advantages of increasing audience numbers and advertising spend.
John Varney
Non-Executive Chairman's Statement
For the year ended 31 December 2018
FINANCIAL REVIEW
Divisions and Markets
For the year ended 31 December 2018
Continuing Operations
2018
£'m
2017
£'m
Change
%
Pebble Beach Systems
9.2
10.3
-11.1%
Total Revenue
9.2
10.3
-11.1%
Pebble Beach Systems
2.9
1.8
61.8%
Central
(0.4)
(1.3)
-72.1%
Total adjusted EBITDA
2.5
0.5
394.0%
Pebble Beach Systems has contributed £9.2 million of revenues and £2.9 million of adjusted EBITDA in 2018. Non-recurring items excluded from adjusted profit are £0.3 million (2017: £0.5 million) charge in respect of rationalisation and redundancy costs.
Discontinued Operations
2018
£'m
2017
£'m
Change
%
Vislink Communication Systems
-
1.0
-100.0%
Total Revenue
-
1.0
-100.0%
Profit/(loss) attributable to equity shareholders
0.2
2.9
-93.3%
The profit attributable to equity shareholders for discontinued operations was £0.2 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 2018 is £3.2 million (2017: £3.2 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 £0.3 million (2017: £0.5 million) of non-recurring costs to the consolidated income statement in respect of rationalisation and redundancy costs.
Cash flows
The Group held cash and cash equivalents of £1.3 million at 31 December 2018 (2017: £1.2 million). The table below summarises the cash flows for the year.
£'million
2018
2017
Cash generated from/(used in) operating activities
1.7
(2.6)
Net cash (used in)/generated from investing activities
(0.8)
7.1
Net cash (used in) financing activities
(0.8)
(3.5)
Effects of foreign exchange
-
(0.3)
Net increase in cash and cash equivalents
0.1
0.7
Cash and cash equivalents at 1 January
1.2
0.5
Cash and cash equivalents at 31 December
1.3
1.2
As at 31 December 2018 net debt was £9.4 million (cash £1.3 million and bank debt of £10.7 million). At the end of January 2019, net debt had reduced to £9.2 million. The Group was using £10.7 million of its available facilities in December 2018.
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.
Rate compared to £ sterling
Average
rate
2018
Average
rate
2017
Year end
rate
2018
Year end
rate
2017
US dollar
1.335
1.289
1.277
1.351
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 2018
2018
2017
Notes
£'000
£'000
Revenue
3
9,174
10,320
Cost of sales
(2,515)
(3,831)
Gross profit
6,659
6,489
Sales and marketing expenses
(2,163)
(2,351)
Research and development expenses
(1,222)
(1,762)
Administrative expenses
(1,759)
(2,718)
Foreign exchange gain/(loss)
28
(95)
Other expenses
(1,723)
(1,931)
Operating loss
4
(180)
(2,368)
Operating loss is analysed as:
Adjusted earnings before interest, tax, depreciation and amortisation
2,470
500
Non-recurring items
3,4
(304)
(512)
Exchange gains/(losses) credited/(charged) to the income statement
28
(95)
Earnings before interest, tax, depreciation and amortisation (EBITDA)
2,194
(107)
Depreciation
(127)
(187)
Amortisation and impairment of acquired intangibles
(1,419)
(1,419)
Amortisation of capitalised development costs
(828)
(655)
Finance costs
5
(296)
(339)
Finance income
5
4
4
Loss before tax
(472)
(2,703)
Tax
6
253
95
Loss for the year being loss attributable to owners of the parent
(219)
(2,608)
Net result from discontinued operations
195
2,892
Net result for the year
(24)
284
Earnings per share from continuing and
discontinued operations attributable to the owners of
the parent during the year
Basic (loss)/earnings per share
From continuing operations
8
(0.2)p
(2.1)p
From discontinuing operations
0.2p
2.3p
From loss for the year
0.0p
0.2p
Diluted (loss)/earnings per share
From continuing operations
8
(0.2)p
(2.1)p
From discontinued operations
0.2p
2.3p
From loss for the year
0.0p
0.2p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
2018
2017
£'000
£'000
(Loss)/Profit for the financial year
(24)
284
Other comprehensive income - items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of overseas operations
- continuing operations
(58)
(92)
- discontinued operations
2
(176)
Recycle translation reserve for discontinued operations
-
(5,077)
Total loss for the year attributable to owners of the parent
(80)
(5,061)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2018
Ordinary shares
£000
Share
premium
£000
Capital
redemption
reserve
£000
Merger
reserve
£000
Translation
reserve
£000
Accumulated losses
£000
Total
£000
At 1 January 2017
3,115
6,800
617
32,448
5,206
(49,218)
(1,032)
Share based payments:
Value of employee services-
-
-
-
-
28
1,247
Transaction with owners
-
-
-
-
-
28
28
Retained profit for the year
-
-
-
-
-
284
284
Transfer
-
-
-
(2,670)
-
2,670
-
Recycle translation reserve for discontinued operations
-
-
-
-
(5,077)
-
(5,077)
Exchange differences on translation of overseas operations
-
-
-
-
(268)
-
(268)
Total comprehensive income/expense for the period
-
-
-
(2,670)
(5,345)
2,982
(5,033)
At 31 December 2017
3,115
6,800
617
29,778
(139)
(46,236)
(6,065)
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 income/expense for the period
-
-
-
-
(56)
(24)
(80)
At 31 December 2018
3,115
6,800
617
29,778
(195)
(46,260)
(6,145)
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
2018
2017
Notes
£'000
£'000
Assets
Non-current assets
Intangible assets
5,422
6,941
Property, plant and equipment
232
285
Deferred tax assets
3
-
5,657
7,226
Current assets
Inventories
210
225
Trade and other receivables
2,391
3,729
Current tax assets
12
5
Cash and cash equivalents
1,269
1,862
3,882
5,821
Liabilities
Current liabilities
Financial liabilities - borrowings
1,100
1,613
Trade and other payables
4,287
5,588
Current tax liabilities
-
-
Provisions for other liabilities and charges
367
400
5,754
7,601
Net current (liabilities)
(1,872)
(1,780)
Non-current liabilities
Financial liabilities - borrowings
9,550
10,500
Deferred tax liabilities
380
644
Provisions for other liabilities and charges
-
367
9,930
11,511
Net assets
(6,145)
(6,065)
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
(195)
(139)
Retained earnings
46,260
(46,236)
Total equity
(6,145)
(6,065)
CONSOLIDATED GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
2018
2017
Notes
£'000
£'000
Cash flows from operating activities
Cash generated from operations
9
2,039
(2,761)
Interest paid
(295)
(348)
Taxation (paid)/received
(25)
528
Net cash from operating activities
1,719
(2,581)
Cash flows from investing activities
Interest received
4
47
Proceeds from sale of property, plant and equipment
3
510
Proceeds from sale of intangibles
-
7,493
Purchase of property, plant and equipment
(88)
(107)
Expenditure on capitalised development costs
(728)
(798)
Net cash generated from/(used in) investing activities
(809)
7,145
Cash flows from financing activities
Net cash used in repayment of financing activities
11
(850)
(3,500)
Net cash used in financing activities
(850)
(3,500)
Net increase in cash and cash equivalents and overdrafts
60
1,064
Effect of foreign exchange rate changes
11
(40)
(272)
Cash and cash equivalents and overdrafts at 1 January
1,249
457
Cash and cash equivalents and overdrafts at 31 December
1,269
1,249
Net debt comprises:
Cash and cash equivalents and overdrafts
1,269
1,249
Borrowings
(10,650)
(11,500)
Net debt at 31 December
11
(9,381)
(10,251)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2018
1. GENERAL INFORMATION
The Pebble Beach Systems Group is a leading global software business specialising in solutions for playout automation, and content serving customers in the broadcast markets.
The Company is a public limited company and is quoted on the Alternative Investment Market (AIM) of the London stock exchange. The Company is incorporated and domiciled in the UK. The address of its registered office is 12 Horizon Business Village, 1 Brooklands Road, Weybridge, Surrey, KT13 0TJ.
The registered number of the Company is 04082188.
This final results announcement was approved for issue at close of business on 27 March 2019.
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 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers became effective. IFRS 9 did not impact the net assets of the Group. IFRS 15 has not had a material impact on the net assets of the Group and the revenue for 2017 has not been re-stated. In addition, standards or amendments issued but not yet effective are not expected to have a material impact on the net assets of the Group.
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 2018 and 31 December 2017 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 2018.
The statutory accounts for the year ended 31 December 2018, prepared under IFRS, will be delivered to the Registrar in due course. The Group's principal accounting policies as set out in the 2018 statutory accounts have been applied consistently in all material respects.
GOING CONCERN
The directors are required to make an assessment of the Company and Group's ability to continue to trade as a going concern.
At 31 December 2018 net debt was £9.4 million (2017: £10.2 million) comprising net cash of £1.3 million (2017 £1.3 million) and bank debt of £10.7 million (2017: £11.5 million).
We maintain a good relationship with our bank and on 27 March 2019 an extension of the current loan agreement was signed with our bank. The revision secures the facility until 30 November 2020 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 have prepared detailed projections of expected cash flows. These projections include the continued impact of cost reductions implemented in 2017 and 2018, margin improvement strategies and sales growth in 2019.
As part of the review, the Board considered sensitivities with regards to the timing of revenue growth coming from the transition in the broadcast industry from SDI to IP platforms. It looked at sensitivities regarding the recovery of gross margin following the completion of the Harmonic OEM. Finally, it considered sensitivities regarding the cost reductions.
The Board have concluded that the primary risk is one of ongoing trading 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 Beach Systems
Central
Total
£'000
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
(2,994)
2,725
(219)
Year to 31 December 2017
Broadcast
10,320
-
10,320
Total revenue
10,320
-
10,320
Adjusted EBITDA
1,772
(1,272)
500
Depreciation
(157)
(30)
(187)
Amortisation of acquired intangibles
(1,419)
-
(1,419)
Amortisation of capitalised development costs
(655)
-
(655)
Non-recurring items
(113)
(399)
(512)
Exchange (losses)/gains
(95)
-
(95)
Finance costs
-
(339)
(339)
Finance income
3
1
4
Intercompany finance income/(costs)
70
(70)
-
Profit/(loss) before taxation
(594)
(2,109)
(2,703)
Taxation
511
(416)
95
Loss for the year being attributable to owners of the parent
(83)
(2,525)
(2,608)
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.
2018
2017
Total
£'000
Total
£'000
By market
UK & Europe
4,820
4,655
North America
585
1,772
Latin America
513
357
Middle East and Africa
2,931
2,811
Asia / Pacific
325
725
9,174
10,320
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.
2018
£'000
2017
£'000
By division:
Pebble Beach Systems
5,308
8,104
Central
(11,453)
(14,169)
(6,145)
(6,065)
4. OPERATING LOSS
The following items have been included in arriving at the operating loss for the continuing business:
2018
£'000
2017
£'000
Depreciation of property, plant and equipment
127
187
Amortisation of acquired intangibles
1,419
1,419
Operating lease rentals
167
167
Exchange (gains)/ losses (credited)/charged to profit and loss
(28)
95
Research and development expenditure expensed in the year which includes:
1,222
1,762
- Amortisation of capitalised development costs
828
655
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:
2018
£'000
2017
£'000
Rationalisation and Redundancy costs
358
362
Provision for former executive debt
(54)
260
Gain on sale of head office
-
(110)
304
512
5. FINANCE COSTS - NET
2018
£'000
2017
£'000
Finance costs
(296)
(339)
Finance income
4
4
Finance costs - net
(292)
(335)
Finance costs represent interest payable on bank borrowings.
Finance income is derived from cash held on deposit.
6. INCOME TAX EXPENSE
2018
£'000
2017
£'000
Current tax
UK corporation tax
27
-
Adjustments in respect of prior years
(11)
169
Total current tax
16
169
Deferred tax
UK corporation tax
(269)
(267)
Adjustments in respect of prior years
-
3
Total deferred tax
(269)
(264)
Total taxation
(253)
(95)
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 (2017: 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.
2018
2017
Earnings
£000
Weighted
average
number
of shares
000s
Earnings
per share
pence
Earnings
£000
Weighted
average
number
of shares
000s
Earnings
per share
pence
Basic and diluted loss per share
Loss attributable to continuing operations
(219)
(0.2)p
(2,608)
(2.1)p
Profit/(loss) attributable to discontinued operations
195
0.2p
2,892
2.3p
Basic and diluted profit/(loss) per share
(24)
124,477
0.0p
284
124,292
0.2p
Potential ordinary shares are non-dilutive in the current and prior years as they would decrease the loss per share from continuing operations. Accordingly, there is no difference between basic and diluted EPS.
Adjusted earnings
The directors believe that adjusted 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:
2018
2017
Earnings
£'000
Earnings
£'000
Pence
Pence
Reported loss per share - continuing operations
(219)
(0.2)p
(2,608)
(2.1)p
Depreciation
105
0.1p
155
0.1p
Amortisation of acquired intangibles after tax
1,178
0.9p
1,178
1.0p
Amortisation of capitalised development costs
687
0.6p
544
0.4p
Non-recurring items after tax
245
0.2p
413
0.3p
Exchange losses/(gains)
(23)
0.0p
77
0.1p
Adjusted (loss)/earnings per share - continuing operations
1,973
1.6p
(241)
(0.2)p
8. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of loss before taxation to net cash flows from operating activities.
2018
£'000
2017
£'000
Loss before tax - continuing operations
(472)
(2,703)
Loss before tax - discontinued operations
184
(2,847)
Total loss before tax
(288)
(5,550)
Depreciation of property, plant and equipment
127
187
(Loss)/(Profit) on disposal of property, plant and equipment
10
(110)
Loss on disposal of VCS
-
1,335
Amortisation and impairment of development costs
828
856
Amortisation and impairment of acquired intangibles
1,419
1,418
Share-based payment expense
-
28
Finance income
(4)
(47)
Finance costs
295
348
Decrease/(increase) in inventories
15
(19)
Decrease in trade and other receivables
848
2,489
Decrease in trade and other payables
(811)
(3,345)
Decrease in provisions
(400)
(351)
Net cash generated from operating activities
2,039
(2,761)
9. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL REDEMPTION RESERVE
Number of shares
'000
Share Capital
£'000
Share Premium
£'000
Capital redemption reserve
£'000
Total
£'000
At 1 January 2018
124,603
3,115
6,800
617
10,532
Share issues
-
-
-
-
-
At 31 December 2018
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 cash equivalents
£'000
Other borrowings
£'000
Total net cash
£'000
At 1 January 2018
1,249
(11,500)
(10,251)
Cash flow for the year before financing
910
-
910
Movement in borrowings in the year
(850)
850
-
Exchange rate adjustments
(40)
-
(40)
Cash and cash equivalents at 31 December 2018
1,269
(10,650)
(9,381)
11. POST BALANCE SHEET EVENTS
On 27 March 2019 an extension of the current loan agreement was signed with our bank. The revision secures the facility until 30 November 2020 with banking covenants and a repayment schedule in place.
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.ENDFR SELEEWFUSESD
Recent news on Pebble Beach Systems
See all newsREG - Pebble Beach Sys Grp - Director/PDMR Shareholding
AnnouncementREG - Pebble Beach Sys Grp - Final Results
AnnouncementREG - Pebble Beach Sys Grp - Holding(s) in Company
AnnouncementREG - Pebble Beach Sys Grp - Trading and Business Strategy Update
AnnouncementREG - Pebble Beach Sys Grp - Holding(s) in Company
Announcement