REG - Pebble Beach Sys Grp - Half-year Report
06/09/2022 07:00
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RNS Number : 3458Y Pebble Beach Systems Group PLC 06 September 2022
Pebble Beach Systems Group plc
Results for the half-year ended 30 June 2022
Pebble Beach Systems Group plc (AIM: "PEB", "Pebble" or the "Group"), a
leading global software business specialising in playout automation and
content management solutions for the broadcast and streaming service markets,
is pleased to announce its unaudited half-year results for the six months
ended 30 June 2022, which are in line with the Trading Update announced on 2
August 2022.
Financial highlights
· Revenue up 3% to £5.0m (H1 21: £4.9m), recurring revenue up 9%
to £2.24m (H1 21: £2.05m)
· Whilst orders received reduced to £5.0m (H1 21: £6.4m) these
are slightly improved against the underlying, COVID-adjusted, H1 21 order
intake of £4.9m thus representing modest growth on a like for like basis.
· Adjusted EBITDA(1) down to £1.3m (H1 21: £1.7m), representing
26% of revenue (H1 21: 35%)
· Profit before tax reduced to £0.3m (H1 21: £1.0m) after c.
£257k of non-recurring costs
· Adjusted earnings per share down to 0.4p (H1 21: 0.8p)
· Net cash generated from operating activities (after interest paid
and IFRS 16 lease payments) was £0.6m (H1 21: £1.8m)
· Gross bank debt reduced by £0.5m in last six months to £7.1m as
at 30 June 2022. Net debt at 30 June 2022 was c.£6.3m representing a Net
debt/last 12 month Adjusted EBITDA(1) of c.2.2x.
· Achieved a re-finance of the bank debt through to September 2024.
Operational highlights
· The delays in sourcing hardware items resulting from the
worldwide shortage of semiconductors have been largely mitigated, including a
measured investment in inventory to allow customer orders to be delivered.
· Investment in our new IP-native Oceans platform continues as
planned.
· Strategic move to a fully remote operating model is delivering
operational benefits in terms of resilience, organisational growth and
employee satisfaction.
· Investigated ways to accelerate funding of growth initiatives.
· Significant success in the Middle East across multiple customers,
defending our position in this key market.
· Adding PayTV channels to a customer in Brazil, expanding a
successful long term partnership with one of the largest broadcast
organisations in the world.
· Breaking into new markets with
o First order in Italy, to a sports broadcaster via a new channel partner.
o Automation and integrated channel contract awarded by a major Indonesian
media corporation.
Current trading and outlook
· Orders for the second half are forecast to be stronger than the
first half, and an improved pipeline underpins this outlook. This will feed
through to improved revenue in the second half.
· Achieved revenue growth in the period despite a sense of a
slowdown in decision making with the Russian invasion of Ukraine.
John Varney, Non-Executive Chairman of Pebble Beach Systems Group plc, said:
"The company has delivered a robust performance for the first half of 2022,
despite some difficult headwinds.
Our continued long-term aim of investing in new software solutions whilst
reducing our overall indebtedness remains central to our strategy to ensure we
continue to be well positioned to benefit from the industry transition to IP
as full-scale adoption occurs.
The Board continues to have confidence that the Group can deliver a strong
second half with improved revenue and achieve market expectations.
Notes
(1) Adjusted EBITDA (earnings before interest, tax, depreciation and
amortisation) a non-GAAP measure, is EBITDA before non-recurring items and
foreign exchange gains/losses.
For further information please contact:
+44 (0) 75 55 59 36 02
Peter Mayhead - CEO
finnCap Ltd (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 www.pebbleplc.com (http://www.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 solutions,
with scalable products designed for applications of all sizes. Founded in
2000, Pebble has commissioned systems in more than 70 countries, with proven
installations ranging from single up to over 150 channels in operation, and
around 2000 channels currently on air under the control of our automation
technology. An innovative, agile company, Pebble is focused on discovering its
customers' requirements and pain points, designing solutions which will
address these elegantly and efficiently, and delivering and supporting these
professionally and in accordance with its users' needs.
Forward-looking statements
Certain statements in this announcement are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to be correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. The Group undertakes no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this announcement should
be construed as a profit forecast.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that the Group has continued its robust performance,
benefiting from the opening up of business travel as COVID restrictions have
been relaxed. This resilient performance has been delivered in spite of a
background of war in Ukraine and hardware supply challenges demonstrating the
strength of the business and the Group's positioning in its market. The first
year of being a remote working operation has been a positive experience and we
have invested in people, IT systems and activities to make this transition a
success. The order intake of £5.0m in the period was modestly up on a
like-for-like basis when adjusting for two large orders delivered in the
comparative period in 2021 totalling £1.5 million, deferred from 2020 because
of COVID which I identified in the interim statement last year.
We delivered revenue of £5.0m, up 3% on the comparative period of 2021.
Recurring revenue from our service contracts was up 9% and this remains an
important element of our growth plans.
Our accelerated investment in cloud and IP-based technology will facilitate
the delivery of our software solutions to meet market demand, as we continue
to see an increase in opportunity for our software. This, together with our
continued investment in Oceans, Pebble's next generation technology platform,
underlines our commitment to support broadcasters as the media landscape
evolves and cloud and IP technologies are more widely adopted.
Financial performance
· Orders received in the period of £5.0m (H1 21: £6.4m);
· Revenue up 3% to £5.0m (H1 21: £4.9m), recurring revenue up 9%
to £2.24m (H1 21: £2.05m);
· Adjusted EBITDA(1) reduced to £1.3m (H1 21: £1.7m),
representing 26% of revenue (H1 21: 35%), following planned investment in
headcount, increased travel and marketing costs and costs associated with the
transition to remote working;
· Net cash from operating activities (after interest paid and IFRS
16 lease payments) fell to £0.6m (H1 21: £1.8m); and
· Increased investment in capitalised R&D of £0.9m (H1 21:
£0.7m) reflecting the Group's strategic focus on continued product
enhancement.
Operational performance
· £3.6m new project wins in the period, including;
· £0.7m project won at the end of the first half from a national
broadcaster in Finland. This is an upgrade and expansion of their current
system providing a flexible hybrid solution allowing transition to IP-based
technologies at a time and scale that meets their needs.
· £0.6m from two contract wins in the Middle East region. One is
an upgrade to an existing system for a customer who has belief in our
technology vision. The other is a new customer, which is both a testament to
the strength of our playout solution and to our reputation for service and
investment in this important region.
· Further channels added by a leading global provider of production
services, expanding a successful relationship, providing sports playout for a
leading US sports streaming platform. This is another project that sits at the
heart of our mission of providing a flexible transition from traditional SDI
infrastructure to IP-based playout.
· Ongoing software development
· Oceans Automation. Work continues on a cloud-native playout
solution to complement our current enterprise level automation offering.
· Media Processing Engine. Work is progressing on the software
solution for video playout capability with preliminary integration with Oceans
Automation achieved. The next milestones will include APIs, graphics
management and subtitling.
· Pebble Control. Development of the IP control tool is advancing
with added control functionality with the release of the first device control
version expected by the end of the year. We are co-chairing the work on the
new open standards protocol and are simultaneously working on the
implementation of it.
· Remote operating model
· We have recently completed our first year as a remote operating
business. We invested in expert help, introduced new systems, held our first
all-staff conference and have a clear vision of how we will move forward with
our staff to deliver the benefits of this new model.
· We have sourced a small workshop to allow us to move out of our
existing location in Weybridge in the second half of 2022.
· Inventory build
· The worldwide shortage of semiconductors continues to have some
impact on project delivery timescales for those projects where customers have
asked us to supply configured hardware. We have mitigated some of the impact
by a measured increase in our hardware inventory.
· Non-recurring charges
· During the period 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
totaling £257k which have been disclosed separately in the income statement
as non-recurring items.
Cash flows and net debt
The Group held cash and cash equivalents of £0.8 million at 30 June 2022 (H1
2021: £1.4 million). The table below summarises the cash flows for the half
year.
2022 2021
£'million £'million
Cash generated from operating activities 0.6 1.8
Net cash used in investing activities (0.9) (0.7)
Net cash used in financing activities (0.5) (0.5)
Net (decrease)/increase in cash and cash equivalents (0.8) 0.6
Cash and cash equivalents at 1 January 1.6 0.8
Cash and cash equivalents at 30 June 0.8 1.4
As at 30 June 2022 net debt(2), excluding the impact of IFRS16, was £6.3
million (cash £0.8 million and bank debt of £7.1 million). The Group was
using all £7.1 million of its available facilities at 30 June 2022, having
re-paid £0.5 million in the period.
Going concern
The Directors, having made suitable enquiries and analysis of the accounts,
consider that the Group has adequate resources to continue in business for the
foreseeable future. In making this assessment, which covers a minimum period
of twelve months from approval of this half-year report, the Directors have
considered the Group's trading forecast, cash flow forecasts, available
headroom and projected financial covenants on the banking facility, the levels
of opportunities in the pipeline and recurring support revenue (See Note 3
below).
Board Changes
As previously announced on 23 August 2022 David Dewhurst resigned as a
Director of the company and has left the executive role of Chief Finance
Officer. For the foreseeable future David will not be replaced and the finance
function, as previously, will report to the CEO.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group remain consistent with
the Principal Risks and Uncertainties reported in the Group's 31 December 2021
Annual Report with one exception.
Since the publication of our 2021 Annual Report, we have Russia's invasion of
Ukraine and the ongoing war. On a global basis this has increased financial
instability and supply chain risks which may ultimately result in an adverse
impact on the Group's businesses, operations, and cash flows. More
specifically, we have customers in both Russia and Ukraine and therefore there
is risk for the Group on our business in those regions, although this is not
expected to impact revenue materially.
The impact of the COVID-19 pandemic on the business continues to be monitored
by the Board.
Current trading and outlook
The first half year has seen continuing challenges that are common to the
majority of technology suppliers at the present time. Customers continue to
take time to place orders and the ongoing challenge of continued delays in the
supply chain driven by chip manufacturing shortages are impacting projects of
all scales, generating some delays.
However, I am pleased to report a modest growth in revenue and believe that
the business has demonstrated its resilience in showing similar levels of
growth in orders on the comparative period once figures for 2021 are
normalised for the post COVID boost from delayed orders from 2020 being
delivered in the first half of 2021.
We are seeing a vibrancy return to the market and a general opening up of
trading, with conferences, trade shows and informal meetings all returning to
pre-pandemic levels. The Board continues to have confidence that the Group can
deliver a strong second half and achieve market expectations, with the forward
order book and pipeline reflecting this confidence. This also supports our
decision to invest more heavily in R&D and ensure that we continue to have
the product portfolio to meet the future requirements of the broadcast and
streaming service markets.
John Varney
Non-Executive Chairman
CONSOLIDATED INCOME STATEMENT
for the half year ended 30 June 2022
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Revenue 4 5,038 4,889 10,620
Cost of sales (1,236) (1,025) (2,490)
Gross profit 3,802 3,864 8,130
Sales and marketing expenses (959) (789) (1,777)
Research and development expenses (838) (638) (1,417)
Administrative expenses (1,334) (1,233) (2,782)
Foreign exchange gains/(losses) 47 (33) (40)
Other expenses (257) - (244)
Operating profit 5 461 1,171 1,870
Operating profit is analysed as:
Adjusted EBITDA 1,297 1,746 3,282
Non-recurring items (257) - (244)
Share based payment expense (20) (13) (53)
Exchange gains/(losses) credited/(charged) to the income statement 47 (33) (40)
Earnings before interest, tax, depreciation and amortisation (EBITDA) 1,067 1,700 2,945
Depreciation (78) (114) (160)
Amortisation and impairment of acquired intangibles - - -
Amortisation of capitalised development costs (528) (415) (915)
Finance costs (183) (168) (373)
Finance income - - -
Profit before tax 278 1,003 1,497
Tax 6 (17) (19) (31)
Profit for the period being attributable to owners of the parent 261 984 1,466
Earnings per share
attributable to the owners of
the parent during the period
Basic earnings per share 7 0.2p 0.8p 1.2p
Diluted earnings per share
Diluted earnings per share 7 0.2p 0.8p 1.2p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the half year ended 30 June 2022
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit for the financial year 261 984 1,466
Other comprehensive income - items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of overseas operations - 6 (1)
Total profit for the period attributable to owners of the parent 261 990 1,465
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the half year ended 30 June 2022
Capital
Ordinary shares Share redemption Merger Translation Accumulated losses
£000 premium reserve reserve reserve £000 Total
£000 £000 £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 - - - - - 20 20
Transactions with owners - - - - - 20 20
Retained profit for the period - - - - - 261 261
Exchange differences on translation of overseas operations - - - - - - -
Total comprehensive income/expense for the period - - - - - 261 261
At 30 June 2022 (Unaudited) 3,115 6,800 617 29,778 (151) (41,826) (1,667)
At 1 January 2021 3,115 6,800 617 29,778 (150) (43,626) (3,466)
Share based payments: value of employee services - - - - - 13 13
Transactions with owners - - - - - 13 13
Retained profit for the period - - - - - 984 984
Exchange differences on translation of overseas operations - - - - 6 - 6
Total comprehensive income/expense for the period - - - - 6 984 990
At 30 June 2021 (Unaudited) 3,115 6,800 617 29,778 (144) (42,629) (2,463)
At 1 January 2021 3,115 6,800 617 29,778 (150) (43,626) (3,466)
Share based payments: value of employee services - - - - - 53 53
Transactions with owners - - - - - 53 53
Retained profit for the year - - - - - 1,466 1,466
Exchange differences on translation of overseas operations - - - - (1) - (1)
Total comprehensive income/expense for the period - - - - (1) 1,466 1,465
At 31 December 2021 (Audited) 3,115 6,800 617 29,778 (151) (42,107) (1,948)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2022
30 June 2022 30 June 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 8 5,993 5,297 5,601
Property, plant and equipment 346 1,114 349
6,339 6,411 5,950
Current assets
Inventories 510 282 430
Trade and other receivables 3,805 3,057 3,632
Cash and cash equivalents 799 1,444 1,639
5,114 4,783 5,701
Liabilities
Current liabilities
Financial liabilities - borrowings 1,000 1,300 1,200
Trade and other payables 5,904 4,521 5,832
Lease liabilities - current 104 143 173
7,008 5,964 7,205
Net current liabilities (1,894) (1,181) (1,504)
Non-current liabilities
Financial liabilities - borrowings 6,050 6,750 6,350
Lease liabilities - non-current 62 943 44
Deferred tax liabilities - - -
6,112 7,693 6,394
Net liabilities (1,667) (2,463) (1,948)
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 (151) (144) (151)
Retained earnings (41,826) (42,629) (42,107)
Total equity (1,667) (2,463) (1,948)
CONSOLIDATED STATEMENT OF CASH FLOWS
for the half year ended 30 June 2022
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 9 802 2,030 3,815
Interest paid (183) (168) (373)
Taxation paid (17) (19) (31)
Net cash from operating activities 602 1,843 3,411
Cash flows from investing activities
Interest received - - -
Purchase of property, plant and equipment (22) (21) (82)
Expenditure on capitalised development costs (920) (711) (1,515)
Net cash used in investing activities (942) (732) (1,597)
Cash flows from financing activities
Net cash used in repayment of financing activities (500) (500) (1,000)
Net cash used in financing activities (500) (500) (1,000)
Net (decrease)/increase in cash and cash equivalents (840) 611 814
Effect of foreign exchange rate changes - 7 (1)
Cash and cash equivalents and overdrafts at 1 January 1,639 826 826
Cash and cash equivalents and overdrafts at period end 799 1,444 1,639
Net debt comprises:
Cash and cash equivalents and overdrafts 799 1,444 1,639
Borrowings (7,050) (8,050) (7,550)
Net debt at period end (6,251) (6,606) (5,911)
NOTES TO THE HALF-YEAR REPORT
for the six months ended 30 June 2022
1. GENERAL INFORMATION
The Pebble Beach Systems Group is a leading global software business
specialising in solutions for playout automation and content, serving
customers in the broadcast markets.
The Company is a public limited company and is quoted on the Alternative
Investment Market (AIM) of the London Stock Exchange. The Company is
incorporated and domiciled in the UK, with registered number of 04082188.
The address of its registered office is 12 Horizon Business Village, 1
Brooklands Road, Weybridge, Surrey, KT13 0TJ.
This half-year results announcement was approved by the board on 5 September
2022.
2. BASIS OF PREPARATION
The financial information for the period ended 30 June 2022 set out in this
half-year report does not constitute statutory accounts as defined in Section
434 of the Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2021 have been filed with the Registrar of
Companies. The auditor's report on those financial statements was unqualified.
The half-year financial information has been prepared using the same
accounting policies and estimation techniques as will be adopted in the Group
financial statements for the year ending 31 December 2022. The Group financial
statements for the year ended 31 December 2021 were prepared under
International Financial Reporting Standards as adopted by the European Union.
These interim financial statements have been prepared on a consistent basis
and format. The Group has not applied IAS 34 'Interim Financial Reporting',
which is not mandatory for AIM companies, in the preparation of these interim
financial statements.
3. GOING CONCERN
The Directors, having made suitable enquiries and analysis of the accounts,
consider that the Group has adequate resources to continue in business for the
foreseeable future. In making this assessment, which covers a minimum period
of twelve months from approval of this half-year report, the Directors have
considered the Group's trading forecast, cash flow forecasts, available
headroom and projected financial covenants on the banking facility, the levels
of opportunities in the pipeline and recurring support revenue.
We maintain a good relationship with our bank. The current loan agreement
secures the facility until 30 September 2024 with banking covenants and a
repayment schedule in place.
We have a strong order book and pipeline which underpin our third and fourth
quarter revenue.
The Directors have a reasonable expectation that the Group will have adequate
resources to continue in business for the foreseeable future and therefore
continue to adopt the going concern basis in preparing the interim financial
statements.
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 Group. 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 by business segment.
Pebble Beach Systems Group Total
£'000 £'000 £'000
6 months to 30 June 2022 (Unaudited)
Total revenue 5,038 - 5,038
Adjusted EBITDA 1,664 (367) 1,297
Depreciation (78) - (78)
Amortisation of capitalised development costs (528) - (528)
Share based payment expense - (20) (20)
Non-recurring items - (257) (257)
Exchange gains 47 - 47
Finance costs (3) (180) (183)
Intercompany finance income/(costs) 168 (168) -
Profit/(loss) before taxation 1,270 (992) 278
Taxation (116) 99 (17)
Profit/(loss) for the period being attributable to owners of the parent 1,154 (893) 261
6 months to 30 June 2021 (Unaudited)
Total revenue 4,889 - 4,889
Adjusted EBITDA 1,987 (241) 1,746
Depreciation (114) - (114)
Amortisation of capitalised development costs (415) - (415)
Share based payment expense - (13) (13)
Exchange gains (31) (2) (33)
Finance costs (19) (149) (168)
Finance income 46 (46) -
Profit/(loss) before taxation 1,454 (451) 1,003
Taxation (77) 58 (19)
Profit/(loss) for the period being attributable to owners of the parent 1,377 (393) 984
Year to 31 December 2021 (Audited)
Total revenue 10,620 - 10,620
Adjusted EBITDA 3,862 (580) 3,282
Depreciation (160) - (160)
Amortisation of capitalised development costs (915) - (915)
Share based payment expense - (53) (53)
Non-recurring items (244) - (244)
Exchange (losses)/gains (40) - (40)
Finance costs (81) (292) (373)
Intercompany finance income/(costs) 107 (107) -
Profit/(loss) before taxation 2,529 (1,032) 1,497
Taxation (298) 267 (31)
Profit/(loss) for the year being attributable to owners of the parent 2,231 (765) 1,466
Geographic external revenue analysis
The revenue analysis in the table below is based on the geographical location
of the customer of the business.
6 months to 30 June 6 months to 30 June Year ended 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Total Total Total
£'000 £'000 £'000
By market
UK & Europe 1,992 3,002 6,385
North America 643 327 927
Latin America 342 156 567
Middle East 1,991 776 1,940
Asia / Pacific 70 628 801
5,038 4,889 10,620
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 to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2020
Total Total Total
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
By division:
Pebble Beach Systems 5,718 5,410 5,860
Group (7,385) (7,873) (7,808)
(1,667) (2,463) (1,948)
5. OPERATING PROFIT
The following items have been included in arriving at the operating profit for
the business:
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
Total Total Total
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Inventory recognised as an expense 829 605 1,288
Director and employee costs 2,923 2,507 5,888
Depreciation of property, plant and equipment 78 114 160
Exchange (gains)/losses (credited)/charged to profit and loss (47) 33 40
Amortisation of capitalised development costs 528 415 915
6. INCOME TAX EXPENSE
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
Total Total Total
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Current tax
UK corporation tax - - -
Foreign Tax - current year 17 19 31
Total current tax 17 19 31
Deferred tax
UK corporation tax - - -
Total deferred tax - - -
Total taxation 17 19 31
In the Spring Budget 2021, the Government announced that from 1 April 2023 the
corporation tax rate would increase from 19 per cent to 25 per cent. Deferred
taxes at the balance sheet 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.
6 months to 30 June 2022 (Unaudited)
Weighted
average Earnings
number per share
Earnings of shares pence
£'000 '000s
Basic earnings per share
Profit attributable to ordinary shareholders 261 0.2p
Basic earnings per share 261 124,477 0.2p
Diluted earnings per share
Profit attributable to ordinary shareholders 261 0.2p
Diluted earnings per share 261 126,761 0.2p
6 months to 30 June 2021 (Unaudited)
Weighted
average Earnings
number per
Earnings of shares share
£'000 '000s pence
Basic earnings per share
Profit attributable to ordinary shareholders 984 0.8p
Basic earnings per share 984 124,477 0.8p
Diluted earnings per share
Profit attributable to ordinary shareholders 984 0.8p
Diluted earnings per share 984 126,909 0.8p
Year ended 31 December 2021 (Audited)
Weighted
average Earnings
number per share
Earnings of shares pence
£'000 '000s
Basic earnings per share
Profit attributable to ordinary shareholders 1,466 1.2p
Basic earnings per share 1,466 124,477 1.2p
Diluted earnings per share
Profit attributable to ordinary shareholders 1,466 1.2p
Diluted earnings per share 1,466 125,775 1.2p
Adjusted earnings
The directors believe that adjusted EBITDA, adjusted earnings and adjusted
earnings per share provide additional useful information on underlying trends
to shareholders. These measures are used by management for internal
performance analysis and incentive compensation arrangements. The term
"adjusted" is not a defined term used under IFRS and may not therefore be
comparable with similarly titled profit measurements reported by other
companies. The principal adjustments are made in respect of the amortisation
of acquired intangibles, share based payment expense, non-recurring items and
exchange gains or losses charged to the income statement and their related tax
effects.
The reconciliation between reported and underlying earnings and basic earnings
per share is shown below:
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
Total Total Total
(Unaudited) (Unaudited) (Audited)
Earnings Earnings Earnings
£'000 Pence £'000 Pence £'000 Pence
Reported earnings and earnings per share 261 0.2p 984 0.8p 1,466 1.2p
Share based payment expense 20 0.0p 13 0.0p 53 0.0p
Exchange (gains)/losses (38) 0.0p 27 0.0p 32 0.0p
Non-recurring items 208 0.2p - 0.0p - 0.0p
Adjusted earnings and earnings per share 451 0.4p 1,024 0.8p 1,551 1.2p
8. INTANGIBLE ASSETS
Goodwill Acquired customer relationships Acquired intellectual property Capitalised development costs Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2021 (audited) 3,218 4,493 3,350 5,423 16,484
Additions (unaudited) - - - 711 711
At 30 June 2021 (unaudited) 3,218 4,493 3,350 6,134 17,195
At 1 January 2021 (audited) 3,218 4,493 3,350 5,423 16,484
Additions (audited) - - - 1,515 1,515
At 1 January 2022 (audited) 3,218 4,493 3,350 6,938 17,999
Additions (unaudited) - - - 920 920
At 30 June 2022 (unaudited) 3,218 4,493 3,350 7,858 18,919
Accumulated amortisation
At 1 January 2021 (audited) - 4,493 3,350 3,640 11,483
Charge for the period (unaudited) - - - 415 415
At 30 June 2021 (unaudited) - 4,493 3,350 4,055 11,898
At 1 January 2021 (audited) - 4,493 3,350 3,640 11,483
Charge for the year (audited) - - - 915 915
At 1 January 2022 (audited) - 4,493 3,350 4,555 12,398
Charge for the period (unaudited) - - - 528 528
At 30 June 2022 (unaudited) - 4,493 3,350 5,083 12,926
Net book value
At 30 June 2022 (unaudited) 3,218 - - 2,775 5,993
At 31 December 2021 (audited) 3,218 - - 2,383 5,601
At 30 June 2021 (unaudited) 3,218 - - 2,079 5,297
At 1 January 2021 (audited) 3,218 - - 1,783 5,001
The amortisation of development costs is included in research and development
expenses in the Consolidated Group Income Statement. Within capitalised
development costs there are £3.6 million (2021: £2.8 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 operating
activities.
6 months to 30 June 2022 6 months to 30 June 2021 Year ended 31 December
2021
Total Total Total
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit before tax 278 1,003 1,497
Depreciation of property, plant and equipment 78 114 160
Amortisation and impairment of development costs 528 415 915
Non-recurring item - - 244
Share based payment expense 20 13 53
Finance income - - -
Finance costs 183 168 373
Increase in inventories (80) (134) (282)
(Increase)/decrease in trade and other receivables (173) 68 (507)
(Decrease)/increase in trade and other payables (32) 383 1,362
Net cash generated from operating activities 802 2,030 3,815
10. NET FUNDS
Reconciliation of change in cash and cash equivalents to movement in net cash:
Net cash and cash equivalents Other borrowings Total net cash
£'000 £'000 £'000
At 1 January 2022 1,639 (7,550) (5,911)
Cash flow for the period before financing (340) - (340)
Movement in borrowings in the period (500) 500 -
Exchange rate adjustments - - -
Cash and cash equivalents at 30 June 2022 (Unaudited) 799 (7,050) (6,251)
At 1 January 2021 826 (8,550) (7,724)
Cash flow for the period before financing 1,111 - 1,111
Movement in borrowings in the period (500) 500 -
Exchange rate adjustments 7 - 7
Cash and cash equivalents at 30 June 2021 (Unaudited) 1,444 (8,050) (6,606)
At 1 January 2021 826 (8,550) (7,724)
Cash flow for the year before financing 1,814 - 1,814
Movement in borrowings in the year (1,000) 1,000 -
Exchange rate adjustments (1) - (1)
Cash and cash equivalents at 31 December 2021 (Audited) 1,639 (7,550) (5,911)
Ends
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