REG - Pebble Beach Sys Grp - Final Results
26/03/2024 07:00
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RNS Number : 2373I Pebble Beach Systems Group PLC 26 March 2024
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 ("MAR") as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement, the inside information is now considered to be in the
public domain for the purposes of MAR.
Pebble Beach Systems Group plc
Final Results for the year ended 31 December 2023
Pebble Beach Systems Group plc (AIM: "PEB", "Pebble" or the "Group"), a
leading global software business specialising in playout, content management,
and IP control solutions for the broadcast and media technology markets, is
pleased to announce its final results for the year ended 31 December 2023.
Financial Headlines
2023 2022
Revenue £12.4m £11.2m
Gross profit £9.5m £8.3m
Gross margin 77% 75%
Adjusted EBITDA* £3.8m £3.2m
Adjusted EBITDA margin 31% 28%
EBITDA £3.6m £2.9m
Pre-tax profit for the year £1.5m £1.2m
Adjusted EPS** 1.4p 1.1p
EPS 1.2p 0.9p
Order Intake £11.0m £11.3m
Cash generated from operations £3.9m £2.7m
Cash conversion of adjusted EBITDA 104% 85%
Net Debt (excluding IFRS 16 leases) £4.7m £5.8m
Net Debt £4.9m £6.0m
Headlines
· Delivered results ahead of market expectations, with
revenue of £12.4 million (FY22: £11.2 million) and adjusted* EBITDA of £3.8
million (FY22: £3.2 million), despite continued tough economic conditions,
with EBITDA also showing year on year growth of £3.6 million (FY22 £2.9
million).
· Gross profit continued to increase YoY, with a 14%
uplift to £9.5 million, at a margin of 77% (FY22: 75%).
· Recurring revenue from support, maintenance and
subscription arrangements within the Group's contracts up 13% to £5.2 million
(FY22: £4.6 million), with recurring revenues representing approximately 42%
(FY22: 41%) of total revenue and this upward trend is expected to accelerate.
· Orders in 2023 of £11.0 million (FY22: £11.3
million), 3% down on FY22. This is due to delays in Service Level Agreement
renewals as an exercise was carried out to ensure charges are at the
appropriate level for the standard of support contracted. £0.8 million of SLA
renewals slipped into FY24.
· We saw a strong project order intake in H2. H2 orders
were £4.0 million, 82% up on H1 order intake (H1: £2.2 million).
· Increased investment in our cloud-native solutions to
support customers transition to IP-based technology. R&D spend of £2.1
million capitalised in the year, 17% up on 2022 (2022: £1.8 million). A
further £0.4 million was spent on research and written off as incurred (2022:
£0.6 million).
· Appointed a new Chief Commercial Officer with
significant market experience to support the Group's market growth strategy
and new product launches.
· The Group continues to reduce its indebtedness, with a
further £1.0 million reduction in gross debt from £6.5 million at the end of
FY22 to £5.5 million at the end of FY23. Net debt (excluding IFRS 16 leases)
was £4.7 million (2022: £5.8 million). Net debt (including IFRS 16 leases)
at the year-end was £4.9 million (2022: £6.0 million).
· Cash generated from operations was £3.9 million (2022:
£2.7 million).
· 104% of Adjusted EBITDA was converted to cash generated
from operations (2022: 85%) allowing the Group to continue to invest in new
products and services at the same time as continuing to reduce our levels of
debt.
· Adjusted EPS** increased 24% to 1.4p (2022: 1.1p).
· EPS also increased 33% to 1.2p (2022: £0.9p).
· Bank facilities re-negotiated in March 2024 with a new
term loan facility in place until 30 October 2026.
John Varney, Non-Executive Chairman, commented:
"Our results continue to be encouraging with 2023 delivering an outstanding
outcome. These results are a testament to the dedication of all our people who
demonstrate, year on year, the ability to execute on our growth strategy and
drive the business forward.
The growing strength of the recurring revenues within the Group, coupled with
the benefits anticipated to materialise from the new product launches, saw the
Group improve its outlook for 2024. We are delighted with how the current year
has started and see 2024 as the platform for further growth in FY25 and
beyond".
* Adjusted EBITDA is defined as operating profit before depreciation,
amortisation and impairment of acquired intangibles, amortisation of
capitalised development costs, share based payment expense, non-recurring
items and exchange gains or losses charged to the income statement.
**Adjusted EPS is calculated on the same basis as basic earnings per share
except for the adding back of the after-tax effect of the adjustments for
amortisation and impairment of acquired intangibles, share based payment
expense, non-recurring items and exchange gains and losses.
- ends -
For further information please contact:
+44 (0) 75 55 59 36 02
Peter Mayhead - CEO
Cavendish Capital Markets Limited (Nominated Adviser and Broker)
Marc Milmo / Teddy Whiley - Corporate Finance +44 (0) 207 220 0500
Tim Redfern / Sunila de Silva - ECM
The Company is quoted on the LSE AIM market (PEB.L). More information can be
found at pebbleplc.com.
About Pebble Beach Systems
Pebble Beach Systems (trading as Pebble) is a world leader in designing and
delivering automation, integrated channel and virtualised playout software
solutions, with scalable products designed for applications of all sizes.
Founded in 2000, Pebble has commissioned systems in more than 70 countries,
with proven installations ranging from single up to over 150 channels in
operation, and around 2000 channels currently on air under the control of our
automation technology. An innovative, agile company, Pebble is focused on
discovering its customers' requirements and pain points, designing solutions
which will address these elegantly and efficiently, and delivering and
supporting these professionally and in accordance with its users' needs.
Forward-looking statements
Certain statements in this announcement are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to be correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. The Group undertakes no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this announcement should
be construed as a profit forecast.
CHAIRMAN'S STATEMENT
INTRODUCTION
I am delighted to be reporting on a year when our results are ahead of market
expectations. This has been achieved despite a challenging financial climate
and continued disruption in the broadcast market. This achievement is a
testament to our people and their delivery of our growth strategy.
Against the challenges of the global macro environment, characterised by high
interest rates, rising inflation, and geopolitical tension, the Group has been
able to continue to invest in new software solutions whilst at the same time
pressing on with reducing our overall indebtedness.
We are reporting on a year of continued strong cash generation; now further
strengthened by a significant increase in our recurring revenues. This has
allowed us to continue to reduce the historic debt burden whilst at the same
time completing a number of successful internal initiatives.
Those initiatives included the mitigation of the increased hardware lead time,
through a temporary increase in hardware inventory, which has now been reduced
to normal levels as supply issues have eased. This has allowed us to turn
around a high number of orders booked in H2 2023, resulting in H2 revenue
being 13% up on the previous year.
We continue to invest in project 'Oceans', our new software platform, which
will be launched publicly in April as PRIMA; Platform for Real-time Media
Applications. The platform uses state of the art software technology to
provide customers with increased flexibility, scalability, and security for
Pebble solutions.
Financials
Revenue in FY23 was up 11% at £12.4 million (2022: £11.2 million) including
recurring revenue from support, maintenance and subscription arrangements
within the Group's contracts, up 13% to £5.2 million (2022: £4.6 million). I
am pleased to report that recurring revenue represents 42% (2022: 41%) of
total revenue and provides good visibility of future years' forecasts. We
expect the upward trend in recurring revenue to accelerate over 2024.
Gross profit was £9.5 million with the Group enhancing its gross margin to
77% (2022: £8.3 million at a margin of 75%). Our gross margin increased as a
result of reduced third party hardware and software costs.
Adjusted EBITDA was £3.8 million (2022: £3.2 million), representing an
Adjusted EBITDA margin of 31% (2022: 28%). Improved year on year EBITDA
margin following a strong revenue performance and careful management of our
costs. A similar increase was also shown in EBITDA, which was a 24% increase
from 2022 to £3.6 million (2022: £2.9 million).
Conversion of profit to cash remained strong in 2023 with 104% of Adjusted
EBITDA converted to cash generated from operations (2022: 85%) allowing our
continued investment in new products and services at the same time as
continuing to reduce our levels of debt.
We continue to view investment in the development of new products and services
as key to future growth and continue to innovate by investing in new
technologies. In the year, we capitalised £2.1 million of development costs
(amortised £1.3 million), (2022: capitalised £1.8 million and amortised
£1.1 million). R&D expenditure as a proportion of revenue was 21%
(2022: 22%).
Net finance costs increased in 2023 reflecting the Group's pay-down of £1.0
million of its term loan which was more than offset by an increased interest
rate of 8.80% (2022: 5.23%). Adjusted profit before tax was £1.7 million
(FY22: £1.4 million) and adjusted earnings per share was 1.4p (2022: 1.1p).
An increase in adjusted profit before tax and adjusted earnings per share is
driven by an additional £0.6 million of adjusted EBITDA, partially offset by
increased interest expense.
The profit before tax for the year was £1.5 million (2022: £1.2 million)
driven by the increased EBITDA from the improved revenue generation in 2023.
This resulted in an earnings per share of 1.2p (2022: 0.9p). We have continued
to invest in our headcount, with a focus on commercial recruitment to support
our anticipated new product launches, including the appointment of a new CCO.
Net debt (excluding IFRS 16 leases) at the year-end was reduced by £1.1
million to £4.7 million (2022: £5.8 million), comprising a cash position at
year end of £0.8 million (2022: £0.7 million) and our gross debt being
reduced by £1.0 million to £5.5 million (2022: £6.5 million).
For the first time in eight years, we closed with a positive group balance
sheet for the year ending 2023.
TERM LOAN
We continue to enjoy a good relationship with our bank, Santander, who remain
very supportive of our strategy to reduce our debt position whilst having the
flexibility to invest in developing our new technology solutions. In March
2024 we agreed a new long-term facility with Santander, refinancing the
existing £5.5 million loan facility until 31 October 2026. The new agreement
has the same covenant tests as the last agreement and a repayment schedule
consistent with previous years.
MARKET POSITIONING
Pebble is a leading global software business specialising in playout, content
management, and IP control solutions for the broadcast and media technology
markets.
Pebble's primary product offering is playout automation software, the
execution of television schedules for broadcast channels. This market
primarily consists of television broadcast companies, and service providers
that offer outsourced services for the broadcasters. This global market is
typified by Pebble customers such as, Fox News, CNBC, IMG, TV Globo. The
market also includes some major streaming services, particularly those
carrying live content.
Pebble's other core software technology is the management and processing of
media associated with broadcast and streaming services, both file-based media
and live media streams. This processing includes the composition of graphics,
video effects, audio processing, and ancillary services such as subtitles and
captioning. Pebble addresses all the requirements of modern broadcast
services.
All Pebble's solutions are designed to meet the demanding mission critical
requirements of broadcast operations. From compliance with demanding security
requirements, to sophisticated resilience to ensure complete on-air
reliability, our solutions are architected to achieve the highest levels of
performance.
Pebble's customer centric culture is widely recognised as providing market
leading service. We manage the customer relationship through the entire system
lifecycle, leveraging our deep domain knowledge to deliver solutions tailored
to our customers specific needs, and to provide 24/7 in life support of their
solutions.
Pebble's portfolio of software-based solutions consists of:
Automation: highly scalable enterprise level playout solution for broadcasters
or service providers with built around best-of-breed technology. The software
allows flexible deployment either on premises, on virtual machines or in the
cloud with exceptional levels of system resiliency.
Integrated Channel: under the control of our Automation software this solution
provides all the functionality of a traditional broadcast chain including
audio, video and graphics functionality.
Remote: real-time, thin-client access to the playout environment via secure
web interfaces. It is easy to use with intuitive interfaces to control,
monitor and manage channels remotely.
Control: provides connection management of IP devices suitable for TV
stations, OB trucks, production houses or anywhere that uses IP workflows.
Workflow: a tool for the design and management of complex media workflows.
Handles the ingest, indexing, and movement of media to support broadcast
channels and streaming services.
MARKET OPPORTUNITY AND PRODUCT DEVELOPMENT ROADMAP
In 2024, Pebble will introduce a new technology platform PRIMA (Platform for
Real-time Integrated Media Applications). This platform represents years of
development and will provide the basis for the company's next generation of
software solutions.
Built using state of the art technologies, PRIMA will immediately expand
Pebble's addressable market by providing more flexible technical capabilities
and a wider range of commercial models.
Multi-platform content delivery
For Pebble, multi-platform content delivery is its ability to deliver complex
workflows to support our customers' linear and on-demand requirements, Video
On Demand, OTT and On-demand. We continue to invest in the development of our
Workflow solution on the PRIMA platform, responding to this type of market
demand.
4K/UHD production
4K and UHD TV global sales have consistently increased since 2014 according to
recent industry statistics. Pebble has already delivered a number of UHD
systems to customers, and the development of PRIMA will reduce Pebble's
reliance on third party hardware software, allowing more cost effective UHD
solutions.
IP infrastructure
IP infrastructure has been an area of focus for Pebble for some time, and we
continue to cement our position as the experts in IP. Our customers are
typically either transitioning to IP infrastructure from legacy SDI
(traditional non-IP digital video) deployments or are implementing IP
infrastructures in a new broadcasting facility or greenfield site, and Pebble
supports both. Control is a software solution designed to manage the
connectivity of IP devices and is being integrated into the PRIMA platform to
expand our IP capabilities.
Cloud Compute: Public, Private, & Hybrid
As broadcast and streaming services evolve, the media technology industry is
constantly seeking more flexible and efficient use of IT infrastructure. Use
of cloud compute is a significant trend in the market, and this is a
combination of public services such as Amazon and Google, private cloud
deployed on a customer's own infrastructure, and hybrid which is a combination
of both. PRIMA has been designed from the ground up to not only support
cloud-based infrastructure, but to be technically and economically efficient.
To complement Pebble's development roadmap and to broaden the Group's product
offering, Pebble is also looking for in-organic opportunities in these areas
that would accelerate the diversification of the company's portfolio. Areas of
specific focus for potential acquisition opportunities are, production
functions such as graphics, and file-based workflows supporting on-demand
streaming applications.
GOING CONCERN
The directors are required to assess the Group's ability to continue to trade
as a going concern. The Board concluded, from its thorough assessment of the
detailed forecasts, that the Group will have sufficient resources to meet its
liabilities during the review period through to 31 December 2025 and that it
is appropriate that the Group prepare accounts on a going concern basis.
BOARD CHANGES
Graham Pitman, Senior Independent Non-Executive Director, stood down on 30
April 2023. Richard Logan, who has been a Non-Executive Director with the
Group since May 2020, became Senior Independent Non-Executive Director on 1
May 2023
TRADING OUTLOOK
As the Group enters 2024 with a strong pipeline, a platform for profit growth
and with our dedicated, happy workforce, the Board are confident of the
opportunities that lay ahead.
As a result of the growth in recurring revenues (the portion of revenues
expected to continue into the future i.e. Service Level Agreements), and with
the benefits that are expected to be delivered from the Group's new product
launches, strong pipeline, and continued debt reduction, we were pleased to
announce in our trading update in January 2024 that we expected FY24 trading
to be ahead of the prevailing market forecasts. We are confident in the market
opportunity for the Company and that the anticipated growth in FY24 will be a
platform for further growth in FY25 and beyond.
John Varney
Non-Executive Chairman
For the year ended 31 December 2023
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
for the year ended 31 December 2023
2023 2022
Notes £000 £000
Revenue 4 12,370 11,167
Cost of sales (2,826) (2,821)
Gross profit 9,544 8,346
Sales and marketing expenses (2,747) (2,234)
Research and development expenses (1,739) (1,696)
Administrative expenses (2,983) (2,789)
Operating profit 5 2,075 1,627
Operating profit is analysed as:
Adjusted EBITDA 3,773 3,166
Non-recurring items 5 (105) (362)
Share based payment expense (57) (53)
Exchange (losses)/gains (charged)/credited to the income statement (31) 145
Earnings before interest, tax, depreciation and amortisation (EBITDA) 3,580 2,896
Depreciation (200) (168)
Amortisation of capitalised development costs (1,305) (1,101)
Operating profit 2,075 1,627
Finance costs (531) (432)
Finance income - -
Profit before tax 1,544 1,195
Tax 6 (10) (13)
Net result for the year 1,534 1,182
Earnings per share from continuing operations attributable to the owners of
the parent during the year
Basic earnings per share 7 1.2p 0.9p
Diluted earnings per share 7 1.2p 0.9p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
2023 2022
£000 £000
Profit for the financial year 1,534 1,182
Other comprehensive income - items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of overseas operations
- continuing operations 9 (34)
Total profit for the year attributable to owners of the parent 1,543 1,148
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2023
Ordinary shares Share Capital Merger Translation Accumulated losses Total
£000 premium redemption reserve reserve £000 £000
£000 reserve £000 £000
£000
At 1 January 2022 3,115 6,800 617 29,778 (151) (42,107) (1,948)
Share based payments: value of employee services - - - - - 53 53
Transactions with employees - - - - - 53 53
Retained profit for the year - - - - - 1,182 1,182
Exchange differences on translation of overseas operations - - - - (34) - (34)
Total comprehensive income for the period - - - - (34) 1,182 1,148
At 31 December 2022 3,115 6,800 617 29,778 (185) (40,872) (747)
At 1 January 2023 3,115 6,800 617 29,778 (185) (40,872) (747)
Share based payments: value of employee services - - - - - 57 57
Transactions with employees - - - - - 57 57
Retained profit for the year - - - - - 1,534 1,534
Exchange differences on translation of overseas operations - - - - 9 - 9
Total comprehensive income for the period - - - - 9 1,534 1,543
At 31 December 2023 3,115 6,800 617 29,778 (176) (39,281) 853
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2023
2023 2022
Notes £000 £000
Assets
Non-current assets
Intangible assets 7,107 6,307
Property, plant and equipment 435 571
Other non-current assets 12 38
7,554 6,916
Current assets
Inventories 303 497
Trade and other receivables 4,318 3,526
Current tax assets - 8
Cash and cash equivalents 796 728
5,417 4,759
Liabilities
Current liabilities
Financial liabilities - borrowings 1,000 935
Trade and other payables 6,169 5,716
Lease liabilities - current 47 96
7,216 6,747
Net current liabilities (1,799) (1,988)
Non-current liabilities
Financial liabilities - borrowings 4,550 5,550
Other payables - non-current 274 -
Lease liabilities - non-current 78 125
4,902 5,675
Net assets/(liabilities) 853 (747)
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 (176) (185)
Retained earnings (39,281) (40,872)
Total surplus/(deficit) 853 (747)
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
2023 2022
Notes £000 £000
Cash flows from operating activities
Cash generated from operations 9 3,917 2,684
Interest paid (531) (432)
Taxation paid (8) (21)
Net cash from operating activities 3,378 2,231
Cash flows from investing activities
Purchase of property, plant and equipment (68) (193)
Expenditure on capitalised development costs (2,105) (1,807)
Net cash used in investing activities (2,173) (2,000)
Cash flows from financing activities
Repayment of borrowings 11 (1,000) (1,000)
Principal elements of lease payments (96) (173)
Net cash used in financing activities (1,096) (1,173)
Net increase/(decrease) in cash and cash equivalents 109 (942)
Effect of foreign exchange rate changes 11 (41) 31
Cash and cash equivalents at 1 January 728 1,639
Cash and cash equivalents at 31 December 796 728
Net debt comprises:
Cash and cash equivalents 796 728
Borrowings (5,550) (6,485)
Lease liabilities (125) (221)
Net debt at 31 December 11 (4,879) (5,978)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the year ended 31 December 2023
1. GENERAL INFORMATION
The Pebble Beach Systems Group is a leading global software business
specialising in solutions for playout automation, and content serving
customers in the broadcast markets.
The Company is a public limited company and is quoted on the Alternative
Investment Market (AIM) of the London stock exchange. The Company is
incorporated and domiciled in the UK. The address of its registered office is
Unit 1, First Quarter, Blenheim Road, Epsom, Surrey, KT19 9QN.
The registered number of the Company is 04082188.
This results announcement was approved for issue at close of business on 25
March 2024.
2. BASIS OF PREPARATION
The financial information contained in these condensed financial statements
does not constitute the Group's statutory accounts within the meaning of the
Companies Act 2006.
Statutory accounts for the year ended 31 December 2023 and 31 December 2022
have been reported on by CLA Evelyn Partners Limited with an unmodified audit
opinion.
Whilst the financial information included in this Annual Financial Results
announcement has been computed in accordance with UK-adopted international
accounting standards, this announcement, due to its condensed nature, does not
itself contain sufficient information to comply with UK-adopted international
accounting standards.
Statutory accounts for the year ended 31 December 2022 have been delivered to
the Registrar of Companies. The statutory accounts for the year ended 31
December 2023, prepared under UK-adopted international accounting standards,
will be available on the Group's website: https://www.pebbleplc.com and
will be delivered to the Registrar in due course. The Group's principal
accounting policies as set out in the 2022 statutory accounts have been
applied consistently in all material respects.
3. GOING CONCERN
The directors are required to assess the Company's and the Group's ability to
continue to trade as a going concern.
At 31 December 2023, the Group's net debt (excluding IFRS 16 leases) was £4.7
million (2022: £5.8 million), comprising cash of £0.8 million (2022: £0.7
million) and the term loan from Santander of £5.5 million (2022: £6.5
million).
We enjoy a close relationship with our bank and have regular review meetings
with them. In March 2024, we signed a new term loan through to 30 October
2026, which re-financed the existing £5.5m million RCF at the same level of
commitment, with repayment levels consistent with previous years and
appropriate financial covenants. There have been no breaches in financial
covenants to date and no breaches are anticipated in the going concern period.
However, both of the financial covenants in relation to the minimum liquidity
and cash flow cover are sensitive to changes in the forecasts related to the
timing of cash collections and payments in Q1 and Q2 2024 due to SLA renewals
slipping from FY 2023 into FY 2024. Management are confident that this timing
delay is short term only and cashflow levels are expected to increase in the
next few months. The Directors are confident that whilst the covenants are not
projected to be breached, management would need to ensure working capital
movements are appropriately managed to ensure the Group meets its covenants.
Management also had to manage working capital movements in quarter one 2024 to
ensure there were no breaches in covenants. Management have estimated the
timing of cash receipts and identified mitigating actions to be taken in the
event of a breach becoming likely. Management's ability to enact these
mitigating actions and their effectiveness are considered significant
judgements.
The directors are confident that any loan extensions required post October
2026 would be granted given the historic track record.
To assess the appropriateness of preparing financial statements on a going
concern basis, management prepared detailed projections of the consolidated
statement of profit and loss, the statement of financial position and cash
flow statements through to 31 December 2025. This review period extends to the
end of the financial year for 2025, which is looking forward 21 months beyond
the date of approval of these financial statements. The projections included
testing against the minimum liquidity and cash flow cover covenants required
by the new term loan facility.
These projections used the forecast for 2024 and were updated for current
trading and forecasts. This analysis was then extended to the end of 2025. The
projections were stress tested in two ways. Project orders for 2024 were
reduced by 50%, then reduced by 40% with a 25% reduction in SLA renewals in
2024 applied. The existing support service contracts, where revenue is
recognised over time were assessed based on historic renewal rates, to
establish the likely renewal of this recurring revenue. Management reviewed
the resource levels and marketing spend required to support the reduced
revenue and reflected cost reductions in the forecast. Even with a 25% drop in
SLA renewals, management concluded the business will remain a going concern.
The Board has concluded from its thorough assessment of the detailed forecasts
and ability to enact any mitigating actions, if required, that the Group will
have sufficient resources to meet its liabilities during the review period
through to 31 December 2025, that it will meet the bank covenants and that it
is appropriate that the Group and the Company prepare accounts on a going
concern basis.
4. SEGMENTAL REPORTING
The Group's internal organisational and management structure and its system of
internal financial reporting to the Board of Directors comprise of Pebble
Beach Systems Limited and PLC costs. The chief operating decision-maker has
been identified as the Board.
The Board reviews the Group's internal financial reporting in order to assess
performance and allocate resources. Management have therefore determined that
the operating segments for the Group will be based on these reports.
The Pebble Beach Systems Limited business is responsible for the sales and
marketing of all Group software products and services.
The table below shows the analysis of Group external revenue and operating
profit from continuing operations by business segment.
Pebble Beach Systems PLC Total
costs £000
Year to 31 December 2023
Broadcast 12,370 - 12,370
Total revenue 12,370 - 12,370
Adjusted EBITDA 4,221 (448) 3,773
Depreciation (200) - (200)
Non-recurring items (105) - (105)
Amortisation of capitalised development costs (1,305) - (1,305)
Share based payment expense - (57) (57)
Exchange gains (31) - (31)
Finance costs (10) (521) (531)
Intercompany finance income/(costs) 336 (336) -
Profit/(loss) before taxation 2,906 (1,362) 1,544
Taxation (10) - (10)
Profit/(loss) for the year being attributable to owners of the parent 2,896 (1,362) 1,534
Year to 31 December 2022
Broadcast 11,167 - 11,167
Total revenue 11,167 - 11,167
Adjusted EBITDA 4,051 (885) 3,166
Depreciation (168) - (168)
Non-recurring items 66 (428) (362)
Amortisation of capitalised development costs (1,101) - (1,101)
Share based payment expense - (53) (53)
Exchange gains 145 - 145
Finance costs (20) (412) (432)
Intercompany finance income/(costs) 211 (211) -
Profit/(loss) before taxation 3,184 (1,989) 1,195
Taxation (223) 210 (13)
Profit/(loss) for the year being attributable to owners of the parent 2,961 (1,779) 1,182
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.
2023 2022
Total Total
£000 £000
By market
UK & Europe 6381 4,967
North America 1,376 1,461
Latin America 1,092 787
Middle East and Africa 3,055 3,466
Asia / Pacific 466 486
12,370 11,167
Net assets
The table below summarises the net assets of the Group by division. The
statement of financial position reporting is disclosed by the divisional
assets and liabilities of the Group as this is consistent with the
presentation of internal information provided to the Executive Management and
the Board of Directors.
concern
2023 2022
£000 £000
By division:
Pebble Beach Systems 6,804 6,232
PLC costs (5,951) (6,979)
853 (747)
5. OPERATING PROFIT
The following items have been included in arriving at the operating profit for
the continuing business:
2023 2022
£000 £000
Charge of inventory 1,359 1,457
Director and employee costs 7,029 6,231
Depreciation of property, plant and equipment 200 168
Non-recurring items 105 362
Exchange losses/(gains) charged/(credited) to profit and loss 31 (145)
Amortisation of capitalised development costs 1,305 1,101
Other expenses
Other expenses comprise:
2023 2022
£000 £000
Non-recurring items 105 362
Non-recurring items
The following items are excluded from management's assessment of profit
because by their nature they could distort the annual trend in the Group's
earnings. These are excluded to reflect performance in a consistent manner and
are in line with how the business is managed and measured on a day-to-day
basis:
2023 2022
£000 £000
Provision for costs of transition to remote working - (66)
CFO costs during notice period - 171
Professional services relating to potential new equity funding (see below) - 257
Senior employee settlement cost (see below) 105 -
105 362
During the year the Group accrued costs of £105,000 relating to the
termination of a senior employee's employment contract.
In the prior year after having been given assurance from HMRC that we
qualified, we explored a potential equity raise, led by a VCT qualifying
raise, that would have provided the Group with additional capital primarily to
accelerate our development of next generation solutions. Whilst we secured
good levels of support from existing and new investors, a combination of a
worsening global economic situation and falling investor sentiment for the
equity markets generally led us to curtail our plans at a fairly late stage in
the process. As a result, we incurred professional fees totalling £0.3m which
have been disclosed separately in the income statement as non-recurring items.
6. INCOME TAX EXPENSE
2023 2022
£000 £000
Current tax
UK corporation tax - -
Foreign tax - current year 10 21
Adjustments in respect of prior years - (8)
Total current tax 10 13
Deferred tax
UK corporation tax - -
Effect of changes in UK tax rate - -
Adjustments in respect of prior years - -
Total deferred tax - -
Total taxation 10 13
In the Spring Budget 2021, the Government announced that from 1 April 2023 the
corporation tax rate would increase from 19 per cent to 25 per cent. This was
confirmed in Autumn 2022. Deferred taxes at the statement of financial
position date have been measured using these enacted tax rates and reflected
in these financial statements.
7. EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
For diluted earnings per share the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The dilutive shares are those share options granted to employees where
the exercise price is less than the average market price of the Company's
ordinary shares during the year. The average market value of the Company's
shares for the purpose of calculating the dilutive effect of share options was
based on quoted market prices for the year during which the options were
outstanding.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
2023 2022
Earnings Weighted Earnings Earnings Weighted Earnings
£000 average per share £000 average per share
number pence number pence
of shares of shares
000s 000s
Basic earnings per share
Profit attributable to continuing operations 1,534 1.2p 1,182 0.9p
Basic earnings per share 1,534 124,477 1.2p 1,182 124,477 0.9p
Diluted earnings per share
Profit attributable to continuing operations 1,534 1.2p 1,182 0.9p
Diluted earnings per share 1,534 127,454 1.2p 1,182 125,709 0.9p
Adjusted earnings
The directors believe that adjusted EBITDA, adjusted earnings and adjusted
earnings per share provide additional useful information on underlying trends
to shareholders. These measures are used by management for internal
performance analysis and incentive compensation arrangements. The term
"adjusted" is not a defined term used under IFRS and may not therefore be
comparable with similarly titled profit measurements reported by other
companies. The principal adjustments are made in respect of the amortisation
of acquired intangibles, share based payment expense, non-recurring items and
exchange gains or losses charged to the income statement and their related tax
effects.
The reconciliation between reported and underlying earnings and basic earnings
per share is shown below:
2023 2022
Earnings £000 Earnings Earnings £000 Earnings
per share per share
pence pence
Reported earnings and EPS 1,534 1.2p 1,182 0.9p
Share based payment expense 57 0.1p 53 0.0p
Non-recurring items 85 0.1p 294 0.3p
Exchange losses/(gains) 23 0.0p (117) (0.1p)
Adjusted earnings and EPS 1,699 1.4p 1,412 1.1p
8. INTANGIBLE ASSETS
Goodwill Acquired customer relationships Acquired intellectual property Capitalised development costs Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2022 3,218 4,493 3,350 6,938 17,999
Additions - - - 1,807 1,807
At 1 January 2023 3,218 4,493 3,350 8,745 19,806
Additions - - - 2,105 2,105
At 31 December 2023 3,218 4,493 3,350 10,849 21,911
Accumulated amortisation
At 1 January 2022 - (4,493) (3,350) (4,555) (12,398)
Additions - - - (1,101) (1,101)
At 1 January 2023 - (4,493) (3,350) (5,656) (13,499)
Additions - - - (1,305) (1,305)
At 31 December 2023 - (4,493) (3,350) (6,961) (14,804)
Net book value
At 31 December 2023 3,218 - - 3,889 7,107
At 31 December 2022 3,218 - - 3,089 6,307
At 1 January 2022 3,218 - - 2,383 5,601
The amortisation of development costs is included in research and development
expenses in the Consolidated Statement of Profit and Loss. Within capitalised
development costs there are £4.9 million (2022: £4.1 million) of fully
written down assets that are still in use.
9. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of profit before taxation to net cash flows from operations.
2023 2022
£000 £000
Profit before tax - continuing operations 1,544 1,195
Depreciation of property, plant and equipment 200 168
Amortisation and impairment of development costs 1,305 1,101
Loss on disposal of property, plant and equipment 20 -
Non-recurring item 105 (66)
Share-based payment expense 57 53
Finance costs 531 432
Decrease/(increase) in other non-current assets 26 -
Decrease/(increase) in inventories 194 (67)
Decrease/(increase) in trade and other receivables (792) 3
Increase/(decrease) in trade and other payables 727 (135)
Cash generated from operations 3,917 2,684
10. CALLED UP SHARE CAPITAL, SHARE PREMIUM AND CAPITAL REDEMPTION RESERVE
Number of shares Share Capital Share Premium Capital redemption reserve Total
£000
000 £000 £000
£000
At 1 January 2023 124,603 3,115 6,800 617 10,532
Share issues - - - - -
At 31 December 2023 124,603 3,115 6,800 617 10,532
11. NET FUNDS
Net debt reconciliation:
Net cash and cash equivalents Other borrowings Total net debt
£000 £000 £000
At 1 January 2023 728 (6,706) (5,978)
Cash flow for the year before financing 1,205 - 1,205
Movement in borrowings in the year (1,000) 1,000 -
Netting of arrangement fee - (65) (65)
Principal lease payments (96) 96 -
Exchange rate adjustments (41) - (41)
Cash and cash equivalents at 31 December 2023 796 (5,675) (4,879)
At 1 January 2022 1,639 (7,944) (6,305)
Cash flow for the year before financing 231 - 231
Movement in borrowings in the year (1,000) 1,000 -
Netting of arrangement fee - 65 65
Principal lease payments (173) 173 -
Exchange rate adjustments 31 - 31
Cash and cash equivalents at 31 December 2022 728 (6,706) (5,978)
12. POST STATEMENT OF FINANCIAL POSITION EVENTS
Since the year-end we have signed a new term loan agreement, details are
disclosed in note 3.
The Board is pleased to confirm that following the publication of its audited
results for the year ended 31 December 2023, the annual report and financial
statements will be posted to shareholders on 7 May 2024 and a copy will also
be available to download from the Group's website at pebbleplc.com.
Ends
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