TIDMPEB
RNS Number : 7314L
Pebble Beach Systems Group PLC
10 September 2019
Pebble Beach Systems Group plc
Results for the half year ended 30 June 2019
Pebble Beach Systems Group plc, a leading global software
business specialising in solutions for playout automation and
content serving customers in the broadcast markets, is pleased to
announce its unaudited results for the half year ended 30 June
2019.
Financial Headlines
For the half year ended 30 June 2019
2019 2018
------------------------------------------- --------- ---------
Order Intake GBP5.2m GBP4.2m
Revenue GBP5.6m GBP3.7m
Gross Margin GBP4.2m GBP2.7m
75% 73%
Adjusted EBITDA* GBP2.0m GBP0.6m
% of Revenue 35% 15%
Adjusted earnings per share* 1.3p 0.2p
Net cash inflow from operating activities GBP0.8m GBP0.1m
Net Debt** GBP9.0m GBP9.4m
Headlines
-- Orders received in the period grew 23.6% to GBP5.2m (H1 2018: GBP4.2m)
-- Revenue up by 51% to GBP5.6m (H1 2018: GBP3.7m)
-- Adjusted EBITDA increased significantly in the period to GBP2.0m (2018: GBP0.6m)
-- Reported profit before tax GBP0.7m (2018: loss GBP0.9m)
-- Net debt further reduced as at 30 June 2019 GBP9.0m (31 December 2018: GBP9.4m)
*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.
**Net debt at 31 December 2018 was GBP9.4m.
John Varney, Non-Executive Chairman of Pebble Beach Systems
Group plc, said:
"We are greatly encouraged with the results for the first half
of 2019. At the start of 2018, the Board put in place an aggressive
plan to turn around the Company. The work that was done during 2018
was both necessary and detailed but, as is normal in turnaround
situations, the numbers that we produced at the end of the year,
whilst encouraging, did not reflect the scale of the progress we
had made. It is therefore very pleasing indeed to be able to report
such an impressive set of results for the first half of 2019. These
are a huge testament to both the quality and hard work of the
people within the business. Whilst the first part of the turnaround
is complete, the marketplace in which we operate is fast moving and
competitive and whilst we have improved our reputation and our
market position, there is still a lot to do.
Looking into the second half of 2019 and beyond our focus is to
continue to build on the trading performance improvements delivered
in 2018 and capitalise on the opportunities presented by the
changes in the broadcast market."
- ends -
For further information please contact:
+44 (0) 75 55 59
36 02
John Varney, Non-Executive Chairman +44 (0) 1932 333
Peter Mayhead, Chief Executive 790
finnCap (Nomad and Broker)
Marc Milmo / Hannah Boros +44 (0) 207 220 0500
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
In 2018, we embarked upon a strategic plan for the turnaround of
the Company. In delivering the first profit after tax for a half
year for continuing operations since 2014, we have demonstrated
that we have the ability, and management capability, to deliver
against this plan and to effect a successful turnaround.
We have a strong suite of automation, Channel in a Box and
content management solutions that are increasingly relevant in a
global broadcast sector that continues to go through significant
change as the approach to the consumption of content continues to
evolve. We are seeing excellent customer engagement and are very
encouraged by the growth in orders seen in the period. We also
recognise that the industry in which we are active will continue to
see advancements in content delivery and therefore with a stronger
platform now in place, a key part of our strategy will be to ensure
we have the technology and software solutions that satisfies the
needs of the broadcast industry.
I am pleased to report that trading in the first months of the
second half of 2019 have been strong and we are firmly on track to
meet management expectations. On behalf of the Board I would like
to thank the executive team and all our hard-working staff for
their diligence and efforts during the period.
John Varney
Non-Executive Chairman
CHIEF EXECUTIVE'S STATEMENT
I am delighted with the progress made by the Company in the
period. Having set out the agenda for growth during the course of
2018 and focussed the Company on its core strength of broadcast
playout solutions, the first six months of 2019 are very
encouraging and provide the Company with a very good platform from
which to fully capitalise on the market opportunity. The period saw
strong order and revenue growth as well as a return to a profit
before tax.
Orders received in the period grew 23.6% to GBP5.2 million (H1
2018: GBP4.2 million). Revenue is up by 51% to GBP5.6 million (H1
2018: GBP3.7 million). Adjusted EBITDA for the business of GBP2.0
million (2018: GBP0.6 million). Reported profit for the period was
GBP0.7 million (2018: loss GBP0.9 million). Net debt further
reduced as at 30 June 2019 to GBP9.0 million (31 December 2018:
GBP9.4 million).
What we do: we support broadcasters around the world 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.
The majority of our customer base is made up of large, global
companies who are often the broadcaster of choice in the
territories that they operate. They have market positions that are
often dominant in their geographies and are thus very keen to
maintain their positions.
Our strategy: we will continue to develop and improve our
technology to ensure we have a competitive offering both today and
in the future. We do this by developing new products internally as
well as constantly monitoring what new startups are offering.
Mission Statement: we want 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.
Sector: broadcasters are now investing into technology to allow
them to compete with the digital media companies that have
disrupted the industry. We are witnessing key media companies
breaking away from the likes of Netflix and looking for solutions
to compete in the digital media space. Our mission is clearly
aligned with this sector development and has led to a 71% increase
in the value of orders for investment into new systems for H1 2019
(GBP2.4 million) compared to H1 2018 (GBP1.4 million).
Financial Results
Pebble Beach Systems achieved H1 2019 revenue of GBP5.6 million
(2018: GBP3.7 million).
Management is confident it will achieve its forecasts for the
year as we head into H2 2019, with a backlog of orders of GBP5.2
million at 30 June 2019 (2018: GBP4.7 million) and a growing
pipeline.
Adjusted EBITDA was GBP2.0 million in H1 2019 (2018: GBP0.6
million) before the deduction of depreciation and amortisation
costs of GBP1.1 million.
In the first half, Central costs were GBP0.3 million (2018:
GBP0.2 million). Reported profit before tax was GBP0.7 million
(2018: loss GBP0.9 million).
The available Revolving Credit Facility (RCF) as at 30 June 2019
was GBP10.1 million (2018: GBP11.5 million) which had been fully
drawn down. Interest paid on the RCF was GBP0.2 million (2018:
GBP0.2 million). There is no overdraft facility (2018: GBP Nil). In
H1 2019 in accordance with the terms of the RCF GBP0.6 million was
paid down (2018: GBP Nil).
The Company continues to view investment in the development of
new products and services as key to future growth. In the first
half of 2019, Pebble Beach Systems capitalised GBP0.5 million of
development costs (2018: GBP0.4 million) and amortised GBP0.4
million (2018: GBP0.4 million).
Dividends
As in previous years, the Board is not declaring an interim
dividend.
Trading Outlook
The broadcast market continues to go through considerable
changes with evolving technologies. The industry as a whole will
benefit from higher spending from customers to invest in IP and
cloud orientated infrastructures.
The momentum in spending and investment within the industry has
been slow but is expected to grow and we are well positioned to
take advantage of this.
Our customers continue to show clear signs of loyalty towards
our world-class, specialist solutions and we are well-placed to
deliver the requirements for the evolving technologies of IP and
cloud orientated infrastructures.
Peter Mayhead
Chief Executive
For the six months ended 30 June 2019
FINANCIAL REVIEW
Divisions and Markets
For the half year ended 30 June 2019
Continuing Operations
2019 2018 Change
GBP'm GBP'm %
----------------------- ------------ ------------ -------
(Unaudited) (Unaudited)
Pebble Beach Systems 5.6 3.7 49.1%
-------
Total Revenue 5.6 3.7 49.1%
----------------------- ------------ ------------ -------
Pebble Beach Systems 2.3 0.8 207.1%
Central (0.3) (0.2) -79.4%
----------------------- ------------ ------------ -------
Total adjusted EBITDA 2.0 0.6 252.6%
Pebble Beach Systems has contributed GBP5.6 million of revenue
and GBP2.3 million of adjusted EBITDA in the six months to 30 June
2019.
Goodwill impairment
In accordance with the requirements of IAS 36 'Impairment of
assets', goodwill is required to be tested for impairment on an
annual basis, with reference to the value of the cash-generating
units ("CGU") in question. The carrying value of goodwill at 30
June 2019 is GBP3.2 million (2018: GBP3.2 million) and relates
solely to Pebble Beach Systems. There is significant headroom
between the carrying value and the value of the forecast discounted
cash flows.
Cash flows
The Group held cash and cash equivalents of GBP1.1 million at 30
June 2019 (2018: GBP1.3 million). Against this are set off debit
balances of GBP Nil (2018: GBP0.3 million). The table below
summarises the cash flows for the half year.
2019 2018
GBP'million GBP'million
------------------------------------------- ------------- ----------------
Cash generated from operating activities 0.8 0.1
Net cash used in investing activities (0.4) (0.3)
Net cash used in financing activities (0.6) -
Effects of foreign exchange - -
------------------------------------------- ------------- ----------------
Net decrease in cash and cash equivalents (0.2) (0.2)
Cash and cash equivalents at 1 January 1.3 1.2
------------------------------------------- ------------- ----------------
Cash and cash equivalents at 30 June 1.1 1.0
------------------------------------------- ------------- ----------------
As at 30 June 2019 net debt was GBP9.0 million (cash GBP1.1
million and bank debt of GBP10.1 million). At the end of August
2019, net debt had reduced to GBP8.9 million. The Group was using
all GBP10.1 million of its available facilities in June 2019.
A marginally positive net increase in cash and cash equivalents
is forecast for the second half of 2019. Scheduled debt repayments
of GBP275,000 were made in March and June 2019. Further repayments
of GBP275,000 are due in September and December 2019.
Foreign exchange
The principal exchange rates used by the Group in translating
overseas profits and net assets into sterling are set out in the
table below.
Period Period
Average Average end end
rate rate rate rate
Rate compared to GBP sterling 2019 2018 2019 2018
------------------------------ ------- ------- ------ ------
US dollar 1.294 1.376 1.273 1.320
------------------------------ ------- ------- ------ ------
Risk management
The Board regularly reviews the full range of business risks
facing the Group. The approach adopted is to identify, evaluate and
manage the likely impact of risk on the Group's business
objectives. Where the risks are unavoidable, they are managed
through business controls and where appropriate through insurance
and treasury activities.
The Group has a programme of regular risk assessment, which
incorporates internal control reviews of both a financial and
non-financial nature. A process of continuous review has been in
place throughout the year at an operating company level to consider
the risk environment and the effectiveness of controls. The results
of reviews, initiatives and progress on implementing control
improvements are regularly reported to the Board.
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2019
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 5,587 3,748 9,174
Cost of sales (1,377) (1,028) (2,515)
------------ ------------ -------------
Gross profit 4,210 2,720 6,659
Sales and marketing expenses (1,052) (1,196) (2,163)
Research and development expenses (717) (600) (1,222)
Administrative expenses (1,030) (830) (1,759)
Foreign exchange gains 24 26 28
Other expenses (511) (871) (1,723)
Operating profit/(loss) 5 924 (751) (180)
--------------------------------------------- ------ ------------ ------------ -------------
Operating profit is analysed as:
Adjusted EBITDA 1,969 559 2,470
Non-recurring items - (167) (304)
Exchange gains credited to the income
statement 24 26 28
--------------------------------------------- ------ ------------ ------------ -------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 1,993 418 2,194
--------------------------------------------- ------ ------------ ------------ -------------
Depreciation (126) (65) (127)
Amortisation and impairment of acquired
intangibles (511) (704) (1419)
Amortisation of capitalised development
costs (432) (400) (828)
Finance costs (210) (152) (296)
Finance income 1 3 4
Profit/(loss) before tax 715 (900) (472)
Tax 6 68 117 253
------------ ------------ -------------
Profit/(loss) for the period being
profit/(loss) attributable to owners
of the parent 783 (783) (219)
Net result from discontinued operations 16 56 195
------------ ------------ -------------
Net result for the period 799 (727) (24)
Earnings per share from continuing
and
discontinued operations attributable
to the owners of
the parent during the period
Basic earnings/(loss) per share
From continuing operations 7 0.6p (0.6)p (0.2)p
From discontinued operations 0.0p 0.0p 0.2p
------------ ------------ -------------
From earnings/(loss) for the period 0.6p (0.6)p 0.0p
--------------------------------------------- ------ ------------ ------------ -------------
Diluted earnings/(loss) per share
From continuing operations 7 0.6p (0.6)p (0.2)p
From discontinued operations 0.0p 0.0p 0.2p
------------ ------------ -------------
From earnings/(loss) for the period 0.6p (0.6)p 0.0p
--------------------------------------------- ------ ------------ ------------ -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2019
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------------ ------------ -------------
Profit/(Loss) for the financial year 799 (727) (24)
Other comprehensive income - items that
may be reclassified subsequently to profit
or loss:
Exchange differences on translation of
overseas operations
- continuing operations (3) (18) (58)
- discontinued operations - 3 2
Total profit/(loss) for the period attributable
to owners of the parent 796 (742) (80)
------------------------------------------------------ ------------ ------------ -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the half year ended 30 June 2019
Capital
Ordinary Share redemption Merger Translation Accumulated
shares premium reserve reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 1 January 2019 3,115 6,800 617 29,778 (195) (46,260) (6,145)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Adjustment on adoption
of IFRS 16 - - - - - (203) (203)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Retained profit for
the period - - - - - 799 799
Exchange differences
on translation of
overseas operations - - - - (3) - (3)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Total comprehensive
income/expense for
the period - - - - (3) 799 796
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 30 June 2019 (Unaudited) 3,115 6,800 617 29,778 (198) (45,664) (5,552)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 1 January 2018 3,115 6,800 617 29,778 (139) (46,236) (6,065)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Retained loss for
the period - - - - - (727) (727)
Exchange differences
on translation of
overseas operations - - - - (15) - (15)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
Total comprehensive
income/expense for
the period - - - - (15) (727) (742)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
At 30 June 2018 (Unaudited) 3,115 6,800 617 29,778 (154) (46,963) (6,807)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
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
(Audited) 3,115 6,800 617 29,778 (195) (46,260) (6,145)
----------------------------- --------- --------- ------------- ---------- ------------- ------------ ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 4,937 6,202 5,422
Property, plant and equipment 1,253 232 232
Deferred tax assets 3 - 3
------------ ------------ ------------
6,193 6,434 5,657
------------ ------------ ------------
Current assets
Inventories 238 220 210
Trade and other receivables 2,972 2,774 2,391
Current tax assets - 18 12
Cash and cash equivalents 1,083 1,275 1,269
------------ ------------ ------------
4,293 4,287 3,882
Liabilities
Current liabilities
Financial liabilities - borrowings 1,310 1,288 1,100
Contract liabilities 1,883 2,522 2,323
Trade and other payables 2,488 2,124 1,964
Provisions for other liabilities
and charges 167 400 367
------------ ------------ ------------
5,848 6,334 5,754
------------ ------------ ------------
Net current liabilities (1,555) (2,047) (1,872)
------------ ------------ ------------
Non-current liabilities
Financial liabilities - borrowings 8,790 10,500 9,550
Other Non-current liabilities 1,107 - -
Deferred tax liabilities 293 527 380
Provisions for other liabilities - 167 -
and charges
------------ ------------ ------------
10,190 11,194 9,930
------------ ------------ ------------
Net liabilities (5,552) (6,807) (6,145)
--------------------------------------------- ------------ ------------ ------------
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 (198) (154) (195)
Retained earnings (45,664) (46,963) (46,260)
------------ ------------ ------------
Total equity (5,552) (6,807) (6,145)
--------------------------------------------- ------------ ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the half year ended 30 June 2019
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 8 1,063 291 2,039
Interest paid (210) (152) (295)
Taxation paid (13) (13) (25)
------------ ------------ -------------
Net cash from operating activities 840 126 1,719
------------ ------------ -------------
Cash flows from investing activities
Interest received 1 3 4
Proceeds from sale of property, plant
and equipment - - 3
Purchase of property, plant and equipment (19) (19) (88)
Expenditure on capitalised development
costs (458) (364) (728)
Net cash (used in)/generated from investing
activities (476) (380) (809)
------------ ------------ -------------
Cash flows from financing activities
Net cash used in repayment of financing
activities (550) - (850)
Net cash used in financing activities (550) - (850)
------------ ------------ -------------
Net (decrease)/increase in cash and
cash equivalents (186) (254) 60
Effect of foreign exchange rate changes - (8) (40)
------------ ------------ -------------
Cash and cash equivalents and overdrafts
at 1 January 1,269 1,249 1,249
Cash and cash equivalents and overdrafts
at period end 1,083 987 1,269
------------ ------------ -------------
Net debt comprises:
Cash and cash equivalents and overdrafts 1,083 987 1,269
Borrowings (10,100) (11,500) (10,650)
------------ ------------ -------------
Net debt at period end (9,017) (10,513) (9,381)
--------------------------------------------- ------ ------------ ------------ -------------
The cash and cash equivalents and overdrafts balance comprise
credit balances of GBP1,083,000 (2018: GBP1,275,000) which have
been set off against debit balances of GBP Nil (2018:
GBP288,000).
NOTES TO THE FINANCIAL STATEMENTS
for the half year ended 30 June 2019
1. GENERAL INFORMATION
The Pebble Beach Systems Group is a leading global software
business specialising in solutions for playout automation and
content, serving customers in the broadcast markets.
The Company is a public limited company and is quoted on the
Alternative Investment Market (AIM) of the London Stock Exchange.
The Company is incorporated and domiciled in the UK. The address of
its registered office is 12 Horizon Business Village, 1 Brooklands
Road, Weybridge, Surrey, KT13 0TJ.
The registered number of the Company is 04082188.
This half year results announcement was approved at close of
business on 9 September 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 16 Leases became
effective. The Group has adopted the modified retrospective
approach to implementation. Accordingly, comparative periods have
not been restated.
From 1 January 2019, at inception of a contract, the Group
assesses whether it is, or contains, a lease. A contract is, or
contains, a lease if it conveys the right to control the use of an
identified asset for a time in exchange for consideration. A
contract conveys the right to control the use of an asset, if the
Group receives substantially all of the economic benefits from its
use over time and controls how it is used.
At inception or on reassessment of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component based on their relative
stand-alone prices.
For contracts entered into before 1 January 2019, the Group
determined whether the arrangement was or contained a lease using
the same assessment.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right of-of-use asset is
initially measured at cost. Cost comprises the initial amount of
the lease liability, adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of its useful life or the end of the lease term. Useful
life is determined on the same basis as other property and
equipment.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease, or if
that cannot be determined, the Group's incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as the
discount rate. The lease liability is measured at amortised cost
using the effective interest method.
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases that have a term of 12 months or less.
The Group recognises the payments associated with these leases as
an expense on a straight-line basis over the lease term.
Under the previous policy none of the Group's leases were
classified as finance leases. Payments made under operating leases
were recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received were recognised as an
integral part of the total lease expense, over the term of the
lease.
The cumulative impact of the adoption of IFRS 16 has been
accounted for as an adjustment to equity. For leases classified as
operating leases in 2018 the Group did not recognise related assets
or liabilities, and instead charged the cost to the income
statement on a straight-line basis over the period of the lease and
disclosed its total commitment in the notes to the financial
statements. Instead of recognising an operating expense for its
operating lease payments, the Group has recognised GBP21,000
interest on its lease liabilities and GBP67,000 amortisation on its
right of use assets. Adjusted EBITDA has increased by GBP84,000
resulting from the reclassification of operating lease cost. It has
not had a material effect on the Group's income or net assets.
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 has been computed in accordance with IFRS. However, this
announcement, due to its condensed nature, does not itself contain
sufficient information to comply with IFRS.
Going Concern
The directors are required to make an assessment of the Group's
ability to continue to trade as a going concern.
At 30 June 2019 net debt was GBP9.0 million (2018: GBP10.5
million) comprising net cash of GBP1.1 million (2018: GBP1.0
million) and bank debt of GBP10.1 million (2018: GBP11.5
million).
We maintain a good relationship with our bank. The current loan
agreement 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 continuing impact of cost reductions
implemented in past years, and margin improvement strategies and
sales growth in the future.
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 gross margin and sales growth. 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.
The Group has prepared forecasts which indicate that it is able
to meet its ongoing banking covenants and debt reduction
schedule.
We have a strong order book and pipeline which underpin our
third and fourth quarter revenue.
The Board remains confident about the future prospects for the
Group and have concluded that it is appropriate to prepare the
Group interim financial statements on a going concern basis.
3. ACCOUNTING POLICIES
Except as described above, the accounting policies applied are
consistent with those of the annual report and financial statements
for the year ended 31 December 2018, as described in those annual
report and financial statements.
Exceptional items are disclosed and described separately in the
financial statements where it is necessary to do so to provide
further understanding of the financial performance of the Group.
They are material items of income or expense that have been shown
separately due to the significance of their nature or amount.
Taxes on income in the half year periods are accrued using the
tax rate that would be applicable to expected total annual earnings
on a country by country basis.
4. SEGMENTAL REPORTING
The Group's internal organisational and management structure and
its system of internal financial reporting to the Board of
Directors comprise of Pebble Beach Systems Limited and Central
costs. The chief operating decision-maker has been identified as
the Board.
The Board reviews the Group's internal financial reporting in
order to assess performance and allocate resources. Management have
therefore determined that the operating segments for the Group will
be based on these reports.
The Pebble Beach Systems Limited business is responsible for the
sales and marketing of all Group software products and
services.
The table below shows the analysis of Group external revenue and
operating profit from continuing operations by business
segment.
Pebble Central Total
Beach Systems
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------------- -------- --------
6 months to 30 June 2019 (Unaudited)
Total revenue 5,587 - 5,587
--------------- -------- --------
Adjusted EBITDA 2,328 (359) 1,969
Depreciation (126) - (126)
Amortisation and impairment of acquired
intangibles (511) - (511)
Amortisation of capitalised development
costs (432) - (432)
Non-recurring items - - -
Exchange (losses)/gains 20 4 24
Finance costs (25) (185) (210)
Finance income 1 - 1
Profit/(loss) before taxation 1,255 (540) 715
Taxation 70 (2) 68
Profit/(loss) for the period being
attributable to owners of the parent 1,325 (542) 783
----------------------------------------------- --------------- -------- --------
6 months to 30 June 2018 (Unaudited)
Total revenue 3,748 - 3,748
Adjusted EBITDA 758 (199) 559
Depreciation (65) - (65)
Amortisation and impairment of acquired
intangibles (704) - (704)
Amortisation of capitalised development
costs (400) - (400)
Non-recurring items (167) - (167)
Exchange (losses)/gains 26 - 26
Finance costs - (152) (152)
Finance income 2 1 3
Loss before taxation (550) (350) (900)
Taxation 117 - 117
Loss for the period being attributable
to owners of the parent (433) (350) (783)
----------------------------------------------- --------------- -------- --------
Year to 31 December 2018 (Audited)
Total revenue 9,174 - 9,174
--------------- -------- --------
Adjusted EBITDA 2,867 (397) 2,470
Depreciation (127) - (127)
Amortisation of acquired intangibles (1,419) - (1,419)
Amortisation of capitalised development
costs (828) - (828)
Non-recurring items (3,858) 3,554 (304)
Exchange (losses)/gains 46 (18) 28
Finance costs - (296) (296)
Finance income 3 1 4
Intercompany finance income/(costs) 118 (118) -
(Loss)/profit before taxation (3,198) 2,726 (472)
Taxation 254 (1) 253
Profit/(loss) for the year being attributable
to owners of the parent (2,944) 2,725 (219)
----------------------------------------------- --------------- -------- --------
GBP3.5 million intercompany debt between Pebble Beach Systems
Ltd and Pebble Beach Systems Group Plc was waived in December
2018.
Geographic external revenue analysis
The revenue analysis in the table below is based on the
geographical location of the customer for continuing operations of
the business.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2018
2019 (Unaudited) 2018
(Unaudited) (Audited)
Total Total Total
GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- -------------
By market
UK & Europe 2,807 1,589 4,820
North America 222 251 585
Latin America 683 242 513
Middle East 1,720 1,608 2,931
Asia / Pacific 155 58 325
5,587 3,748 9,174
---------------- ------------- ------------- -------------
Net assets
The table below summarises the net assets of the Group by
division. Balance sheet reporting is disclosed by the divisional
assets and liabilities of the Group as this is consistent with the
presentation of internal information provided to the Executive
Management Board and the Board of Directors.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------- ------------ ------------ -------------
By division:
Pebble Beach Systems 4,935 6,360 5,308
Central (10,487) (13,167) (11,453)
(5,552) (6,807) (6,145)
---------------------- ------------ ------------ -------------
5. OPERATING PROFIT
The following items have been included in arriving at the
operating profit for the continuing business:
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------ ------------ -------------
Depreciation of property, plant and equipment 126 65 127
Amortisation of acquired intangibles 511 704 1,419
Operating lease rentals - 84 167
Exchange (gains)/ losses (credited)/charged
to profit and loss (24) (26) (28)
Research and development expenditure
in the year which includes: 717 1,222 1222
* Amortisation of capitalised development costs 432 400 828
----------------------------------------------------------- ------------ ------------ -------------
Non-recurring items
The following items are excluded from management's assessment of
profit because by their nature they could distort the Group's
underlying quality of earnings. They are excluded to reflect
performance in a consistent manner and are in line with how the
business is managed and measured on a day-to-day basis:
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------ -------------
Rationalisation and Redundancy costs - 167 358
Provision for former executive debt - - (54)
- 167 304
---------------------------------------------------- ------------ -------------
6. INCOME TAX EXPENSE
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ -------------
Current tax
UK corporation tax - - 27
Foreign Tax - current year 19 3 -
Adjustments in respect of prior years - - (11)
--------------------------------------- ------------ ------------ -------------
Total current tax 19 3 16
--------------------------------------- ------------ ------------ -------------
Deferred tax
UK corporation tax - (120) (269)
Total deferred tax (87) (120) (269)
--------------------------------------- ------------ ------------ -------------
Total taxation (68) (117) (253)
--------------------------------------- ------------ ------------ -------------
Changes to the UK corporation tax rates were substantively
enacted on 7 September 2016. These include reductions to the main
rate to reduce the rate to 17 per cent from 1 April 2020. Deferred
tax has been provided for at the rate of 17 per cent (2018: 17 per
cent).
7. EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The dilutive shares are those
share options granted to employees where the exercise price is less
than the average market price of the Company's ordinary shares
during the year.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
Year ended 31 December
6 months to 30 June 2019 2018
(Unaudited) (Audited)
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
GBP'000 '000s pence GBP'000 '000s pence
----------------------------- --------- ------------ ---------- --------- ------------ ----------
Basic earnings per share
Profit/(loss) attributable
to continuing operations 783 0.6p (219) (0.2)p
Profit attributable
to discontinued operations 16 0.0p 195 0.2p
----------------------------- --------- ------------ ---------- --------- ------------ ----------
Basic earnings/(loss)
per share 799 124,477 0.6p (24) 124,477 0.0p
----------------------------- --------- ------------ ---------- --------- ------------ ----------
Diluted earnings per
share
Profit/(loss) attributable
to continuing operations 783 0.6p (219) (0.2)p
----------------------------- --------- ------------ ---------- --------- ------------ ----------
Profit attributable
to discontinued operations 16 0.0p 195 0.2p
----------------------------- --------- ------------ ---------- --------- ------------ ----------
Diluted earnings/(loss)
per share 799 124,577 0.6p (24) 124,477 0.0p
----------------------------- --------- ------------ ---------- --------- ------------ ----------
6 months to 30 June 2018
(Unaudited)
Weighted
average Earnings
number per
Earnings of shares share
GBP'000 '000s pence
----------------------------- --------- ------------ ----------
Basic loss per share
Loss attributable to
continuing operations (783) (0.6)p
Profit attributable
to discontinued operations 56 0.0p
----------------------------- --------- ------------ ----------
Basic loss per share (727) 124,477 (0.6)p
----------------------------- --------- ------------ ----------
Diluted loss per share
Loss attributable to
continuing operations (783) (0.6)p
Profit attributable
to discontinued operations 56 0.0p
----------------------------- --------- ------------ ----------
Diluted loss per share (727) 124,477 (0.6)p
----------------------------- --------- ------------ ----------
Potential ordinary shares were non-dilutive in the prior periods
because they would decrease the loss per share from continuing
operations. Accordingly, there was 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:
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
Earnings Earnings Earnings
GBP'000 Pence GBP'000 Pence GBP'000 Pence
------------------------------------------ -------- ------ -------- ------- -------- -------
Reported earnings/(loss) per share
- continuing operations 783 0.6p (783) (0.6)p (219) (0.2)p
Depreciation 105 0.1p 54 0.0p 105 0.1p
Amortisation of acquired intangibles
after tax 424 0.3p 584 0.4p 1,178 0.9p
Amortisation of capitalised development
costs 359 0.3p 332 0.3p 687 0.6p
Non-recurring items after tax - - 135 0.1p 245 0.2p
Exchange losses/(gains) (19) 0.0p (21) 0.0p (23) 0.0p
-------- ------ -------- ------- -------- -------
Adjusted earnings per share - continuing
operations 1,652 1.3p 301 0.2p 1,973 1.6p
------------------------------------------ -------- ------ -------- ------- -------- -------
8. CASH FLOW GENERATED FROM OPERATING ACTIVITIES
Reconciliation of loss before taxation to net cash flows from
operating activities.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
Total Total Total
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------ ------------ -------------
Profit/(loss) before tax - continuing
operations 715 (900) (472)
Profit before tax - discontinued operations 16 56 184
----------------------------------------------- ------------ ------------ -------------
Total profit/(loss) before tax 731 (844) (288)
Depreciation of property, plant and equipment 126 65 127
Loss on disposal of property, plant and
equipment - - 10
Amortisation and impairment of development
costs 432 400 828
Amortisation and impairment of acquired
intangibles 511 703 1,419
Finance income (1) (3) (4)
Finance costs 210 152 295
Decrease/(increase) in inventories (28) 5 15
Decrease/(increase) in trade and other
receivables (581) 955 848
Decrease in trade and other payables (137) (942) (811)
Decrease in provisions (200) (200) (400)
----------------------------------------------- ------------ ------------ -------------
Net cash generated from operating activities 1,063 291 2,039
----------------------------------------------- ------------ ------------ -------------
9. NET FUNDS
Reconciliation of change in cash and cash equivalents to
movement in net cash:
Net cash and Other borrowings Total net
cash equivalents GBP'000 cash
GBP'000 GBP'000
------------------------------------------- ------------------ ----------------- ----------
At 1 January 2019 1,269 (10,650) (9,381)
Cash flow for the period before financing 364 - 364
Movement in borrowings in the period (550) 550 -
Exchange rate adjustments - - -
------------------------------------------- ------------------ ----------------- ----------
Cash and cash equivalents at 30 June
2019 (Unaudited) 1,083 (10,100) (9,017)
------------------------------------------- ------------------ ----------------- ----------
At 1 January 2018 1,249 (11,500) (10,251)
Cash flow for the period before financing (254) - (254)
Movement in borrowings in the period - - -
Exchange rate adjustments (8) - (8)
------------------------------------------- ------------------ ----------------- ----------
Cash and cash equivalents at 30 June
2018 (Unaudited) 987 (11,500) (10,513)
------------------------------------------- ------------------ ----------------- ----------
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 (Audited) 1,269 (10,650) (9,381)
------------------------------------------- ------------------ ----------------- ----------
Ends
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRGDCGSGBGCC
(END) Dow Jones Newswires
September 10, 2019 02:01 ET (06:01 GMT)
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