Pebble Beach Systems Group PLC Final Results (3764K)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Pebble Beach Systems Group Plc	LSE:PEB	London	Ordinary Share	GB0001482891	ORD 2.5P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	10.50	10.00	11.00	10.50	10.50	10.50	2,400	07:49:18

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Radio, Tv Broadcast, Comm Eq	12.37M	1.53M	0.0123	8.54	13.07M

Pebble Beach Systems (LSE:PEB)
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Pebble Beach Systems Group PLC

05 May 2022

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 ("MAR"). 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 2021

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 final results for the year ended 31 December 2021.

Financial Headlines

 
                                                 2021        2020 
------------------------------------  ---------------  ---------- 
 
   Revenue                                   GBP10.6m     GBP8.4m 
 Gross profit                                 GBP8.1m     GBP6.4m 
 Gross margin                                     77%         77% 
 Adjusted EBITDA*                             GBP3.3m     GBP2.7m 
 Adjusted EBITDA margin                           31%         32% 
 Pre-tax profit for the year                  GBP1.5m     GBP1.1m 
 Adjusted EPS**                                  1.2p        1.1p 
 Order Intake                                GBP13.7m     GBP7.8m 
 Cash generated from operations               GBP3.8m     GBP2.5m 
 Cash conversion of adjusted EBITDA              116%         93% 
 Net Debt***                                  GBP5.9m     GBP7.7m

Headlines

-- Strong performance as business successfully adapted to the Covid pandemic with revenue up 27% on 2020. Recurring revenue from support contracts up 15% to GBP4.6 million, being 43% of total revenue

-- Order intake was up 75% on 2020 and when adjusting for Covid-related delays, order intake was still

up circa 17%

-- Adjusted EBITDA was up 23% and cash conversion of adjusted EBITDA improved 23 percentage points.

   --     Increased investment in new digital platform to establish all-IP workflows

-- Strategic move to a remote working organisation in July 2021 delivering operational benefits in terms of resilience, organisational growth and performance. Won the UK Company Culture Award for "Remote Team of the Year" in April 2022

-- Reduced long-term bank debt by a further GBP1.0 million, with net debt at year end of GBP5.9 million (2020: GBP7.7 million)

   --     Bank facilities re-negotiated in April 2022 with term loan facility until 30 September 2024 
   --     The current financial year has started in line with expectations

* 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 and exchange gains and losses.

*** Net debt excludes liabilities in respect of right of use assets recognised under IRFS 16.

- ends -

For further information please contact:

 
 
 Peter Mayhead - CEO                        +44 (0) 75 55 59 
  David Dewhurst - CFO                      36 02 
 
 finnCap Ltd (Nominated Adviser 
  and Broker ) 
  Marc Milmo / Teddy Whiley - Corporate      +44 (0) 207 220 
  Finance                                    0500 
 Tim Redfern / Sunila de Silva 
  - ECM

The Company is quoted on the LSE AIM market (PEB.L). More information can be found at 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 very pleased to be reporting on a year of significant achievement for the Group.

Throughout 2021 we saw our customers' confidence return and investment decisions that were put on hold during 2020 were clearly being re-initiated, resulting in order intake rising 75% to GBP13.7 million. A proportion of this growth can be attributed to the understandable delays to orders in 2020 that came through in 2021, however, underlying order growth delivered in the year was c.17%.

Observations of the market's priorities during 2021 have reaffirmed our strongly held view that our current mission to support broadcasters by providing technology solutions to facilitate their transition from traditional broadcast infrastructure to more flexible IP-based technologies is strategically correct. Consequently, we again increased the level of investment in our new digital platform, Oceans, which has all the benefits of a cloud native environment allowing our customers to establish all-IP workflows whilst retaining their ability to utilise investment made in our existing installed solutions.

We have demonstrated that our ability to operate successfully in the context of the Covid pandemic is fully sustainable and, when coupled with the strategic decision to adopt a remote working model, positions us as a strong, resilient organisation that is responsive to our customers' needs.

In April 2022, we were delighted to win the UK Company Culture Award for "Remote Team of the Year". This achievement is a testimony to the huge efforts every employee has made since our move to fully remote working in 2021. It is recognition of the success of our operating model changes and keeps the momentum behind the continued improvements we are making as we realise our vision to ensure equality of opportunity for all employees.

FINANCIAL RESULTS

Revenue was up 27% at GBP10.6 million (2020: GBP8.4 million) including recurring revenue from support contracts up 15% to GBP4.6 million (2020: GBP4.0 million). Recurring revenue represents 43% of total revenue and provides greater visibility of future years' forecasts.

Gross profit was GBP8.1 million at a margin of 77% (2020: GBP6.4 million at a margin of 77%).

Adjusted EBITDA was GBP3.3 million (2020: GBP2.7 million), representing 31% of revenue (2020: 32%).

Conversion of profit to cash remained strong in 2021, with 116% of Adjusted EBITDA converted to cash generated from operations (2020:93%) allowing 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 GBP1.5 million of development costs (amortised GBP0.9 million), (2020: capitalised GBP1.3 million) (amortised GBP0.8 million). To evidence this, R&D expenditure as a proportion of revenue was 19% (2020: 20.8%).

Net finance costs remained level in 2021 reflecting the Group's pay-down of GBP1.0 million of its revolving credit facility ("RCF") and a marginally reduced interest rate of 3.58% (2020: 3.64%) offsetting the impact of interest costs in the United States.

The profit before tax for the year was GBP1.5 million (2020: GBP1.1 million). The adjusted earnings per share was 1.2p (2020: 1.1p)

Net debt (excluding IFRS 16 leases) at the year-end was reduced by GBP1.8 million to GBP5.9 million (2020: GBP7.7 million), comprising a much-improved cash position at year end of GBP1.6 million (2020: GBP0.8 million) and debt of GBP7.5 million (2020: GBP8.5 million).

New TERM LOAN April 2022

We enjoy a good relationship and regular communication with our bank, Santander, who remain very supportive of our strategy to invest in developing our new technology solutions. Post period end, on 13 April 2022, we were delighted to sign a new term loan facility, refinancing the existing GBP7.15 million RCF agreement. The new term loan secures a GBP7.15 million facility until 30 September 2024, with revised financial covenants and a repayment schedule consistent with previous years.

MARKET POSITIONING

Pebble is a leading global software business specialising in playout automation and content management solutions for broadcast and streaming services markets.

The main sector within the media tech market that is served by Pebble's software is the playout automation market. Within this sector, the customers that we principally interact with are broadcasters, either directly or through service providers who deliver playout services to those broadcasters, many of whom are global organisations . These customers include companies such as Fox News, CNBC, IMG, Phoenix Television and Globosat Canais. In addition to playout automation, Pebble's other core software technology is the Integrated Channel solution. These solutions have been designed to support broadcasters and service providers to deliver their scheduled content in a reliable and secure way. As downtime is not acceptable in the broadcast industry, playout software is exceptional at flagging any issues, creating backup channels (redundancy) and providing disaster recovery.

One of Pebble's key strengths is an ability to focus on collaboration with customers to determine their requirements and design solutions which address their needs elegantly and efficiently. During the lifecycle of the software solution, we deliver full support services in accordance with customer requirements.

Pebble's existing solutions consist of:

Automation : highly scalable enterprise level software solution for broadcasters or service providers with complex workflow requirements 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.

Automation Lite : a simpler software offering optimised to allow control of up to six channels, offering best-of-breed functionality at an entry-level price.

Integrated Channel : under the control of our Automation software this solution provides a one-stop-shop for channel playout offering audio, video and graphics functionality. Hosted on powerful servers, the software provides all the functionality of a traditional broadcast chain.

Virtualised Playout : a software-only implementation of the Integrated Channel solution, with the ability to host channels in a private data centre or public cloud. Virtualised Playout can launch and decommission channels for short term requirements and host operational infrastructure in a standard data centre environment.

Playout in a box : a compact playout solution, combining a 'best of breed' approach with an affordable price point but without the need for high levels of flexibility. Controlling up to six channels the self-contained Playout in a box solution is suitable for new market entrants, for testing new channels, or as a backup or disaster recovery system for a smaller channel.

In addition to these core technology solutions, Pebble also provides applications with discrete functionality. The current range includes:

Pebble Remote : secure, real-time access to the playout environment from anywhere, anytime. It is easy to use with intuitive interfaces and aimed at anyone with a Pebble solution who is seeking to control, monitor and manage channels remotely.

Pebble Control : a recent release providing connection management of IP devices suitable for TV stations, OB trucks, production houses or anywhere that uses IP workflows. Control is providing Pebble with the opportunity to enter new markets outside of the automation space.

Orchestration : a soon to be released tool for the design and management of complex workflows. The first fully Oceans-native capability initially focussed on replacing and significantly enhancing the file management capability provided by the Pebble's current Automation software.

MARKET OPPORTUNITY AND PRODUCT DEVELOPMENT ROADMAP

We are very focused on recognising Pebble's core strengths and technical capability to ensure we continue to enhance our portfolio of software solutions to meet the evolving requirements of our customers. An industry report from June 2020, commented that the top "Media Tech Priorities" for the industry were: multi-platform content delivery, 4K/UHD production, IP infrastructure, remote production and cloud-based solutions. Our directors believe that Pebble's current range of solutions, together with the progress being made against its product roadmap, will ensure that our technology offering will continue to be meet these priorities:

Multi-platform content delivery

For Pebble, multi-platform content delivery is its ability to deliver complex workflows, Video On Demand, OTT and On-demand. During the year, we supported TV2 Denmark, who acquired rights for major sporting events including the Tour de France, Wimbledon and the Euros, with their OTT service "TV 2 Play". We continue to invest in the development of our Orchestration Engine, 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, and it is our belief that this area is becoming a priority within the broadcast sector. Pebble has UHD installations such as the installation at IMG Studios, a state-of-the-art broadcast production and worldwide distribution facility based near London. Currently, these growing signal complexities are addressed through expensive third-party hardware but in future, Pebble's product development roadmap is focused on an in-house developed cloud-based media processing engine, to remove the dependency on third-party hardware.

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 the legacy, SDI, or are implementing IP infrastructure in a new broadcasting facility, and Pebble supports both. Pebble Control, is a software solution for device configuration and monitoring, designed with security at its core. In the future, Pebble's Ocean's platform will be hosting an automation engine that is IP-native, allowing full, public-cloud deployment.

Remote production

At the beginning of 2020, coronavirus lockdowns across the world pushed a surge in remote working across many industries globally, the broadcast industry included. Our web-based monitoring software, Pebble Remote, gives customers secure, real-time access from anywhere allowing Pebble to successfully deliver against customers' needs as they shifted to geographically dispersed operations.

Cloud Compute

Pebble is also seeking to better address the Cloud Compute priority. We believe the move to remote working has accelerated the move to the cloud. Over 50 percent of broadcasters have already deployed some form of cloud-based technology with 40 percent stating they are likely to continue adoption according to data from the IABM. At present, Pebble's technology can be utilised through the cloud for storage and hosting capabilities. To further enhance our offering, the Oceans platform is being designed to provide customers with software that is fundamentally cloud-centric.

Having regard to the key trends being seen in the industry, and the undoubted market opportunity before it, the Board remains focussed on delivering against its product development roadmap of:

(i) Oceans Automation; an automation only capability to replace the current playout automation offering with a secure cloud-native solution.

(ii) Media Processing Engine; to reduce the requirement for hardware to provide video playout capability. By developing a software solution, this will enable Pebble to provide a fully cloud native integrated channel capability.

(iii) Pebble Control; by accelerating the ongoing development of its IP control tool, the directors believe that this will provide the opportunity to target the product into any market requiring IP network-based device control.

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 2021, the Group's net debt was GBP5.9 million (2020: GBP7.7 million), comprising cash of GBP1.6 million (2020: GBP0.8 million) and the drawn down RCF from Santander of GBP7.5 million (2020: GBP8.5 million).

We enjoy a close relationship with our bank and have regular review meetings with them. On 10 March 2021, we signed a 12-month extension to the RCF and have made all the required repayments of capital and interest due and met the financial covenants. On 13 April 2022, we signed a new term loan through to 30 September 2024, which re-financed the existing GBP7.15m RCF at the same level of commitment, with repayment levels consistent with previous years and appropriate financial covenants.

To assess the appropriateness of preparing financial statements on a going concern basis, management prepared detailed projections of the consolidated income statements, balance sheets and cash flow statements through to 31 December 2023. This review period extends to the end of the financial year for 2023, which is looking forward for four six-month periods beyond that covered by the current annual report. The projections included testing against the minimum liquidity and cash flow cover covenants required by the new term loan facility.

These projections used the budget for 2022 and updated for current trading and forecasts. This analysis was then extended to the end of 2023. The projections were stress tested and pipeline project orders for 2022, at less than 50% probability were removed. The pipeline for 2023 was assessed based on historic conversion rates. 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. The Board has 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 2023, 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.

BOARD CHANGES

As previously announced on 4 May 2021, we were pleased to appoint Chris Errington to the Board as Non-Executive Director.

TRADING OUTLOOK

The current financial year has started in line with expectations. Pebble has demonstrated its resilience throughout the global pandemic and more recently in its response to the ongoing supply chain stresses and the Ukrainian conflict. We are confident in our strategy and encouraged by the increasing level of recurring revenue and the continued strengthening of the balance sheet.

Fundamentally, the business is in good shape and we remain focussed on ensuring we provide our customers with the technology and high level of service that they expect from Pebble. We will continue to invest in enhancing our solutions and we look forward to the future with optimism.

John Varney

Non-Executive Chairman

For the year ended 31 December 2021

CONSOLIDATED GROUP INCOME STATEMENT