Final Results

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR") as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.

Pebble Beach Systems Group plc

Final Results for the year ended 31 December 2024

Pebble Beach Systems Group plc (AIM: "PEB", "Pebble" or the "Group"), a leading global software business specialising in playout automation and integrated channel solutions for the broadcast and streaming markets, is pleased to announce its final results for the year ended 31 December 2024.

Financial Headlines

Headlines

• Order intake of £13.6 million was 24% up on 2023 total order intake (FY23: £11.0 million). This was driven by a 56% increase in Service Level Agreement ("SLA") orders year on year, with £7.5 million booked in FY24 (FY23: £4.8 million). Project orders remain flat year on year with £6.1 million booked in 2024 (FY23: £6.2 million).

• SLA orders of £7.5 million included £1.5 million of multi year SLA orders relating to future periods. FY24 also included £0.4 million of SLA orders that we had hoped to book in FY23 but were delayed due to the levelling up of SLA prices.

• Challenging market conditions and delays in the anticipated timing of project orders resulted in a 25% reduction in project revenue year on year. 45% of project orders were received in December 2024.

• Revenue of £11.5 million (FY23: £12.4 million) and Adjusted* EBITDA of £3.3 million (FY23: £3.8 million). This reduction from the prior year was a result of the delays in the timing of project orders. This reduction in revenue has also caused the reduction in the Adjusted* EBITDA margin of 29% (FY23: 31%).

• The Group achieved revenue of £11.5 million, including an 17% increase in SLA recurring revenue to £6.1 million (FY23: £5.2 million). We have visibility for further increases in SLA revenue as customers on staged price rises will see their SLA price increase in 2025.

• The increase in recurring revenue is driven by the levelling up exercise the Group is conducting to ensure all premium SLAs are 15% of their system list price.

• Operating expenses of £9.6 million for FY24 are up year on year (FY23: £7.5 million) due to a one-off impairment of intangibles (see note 7).

• Pre tax loss of £1.3 million (FY23 pre tax profit: £1.5 million) reflects the impact of a one-off impairment of £2.7 million from the historical investment in IP native software (see note 7), higher exchange losses and non-recurring costs. Without this one-off impairment charge, the profit before tax for the year would have been £1.4 million (FY23: £1.5 million).

• The Group continues to demonstrate strong cash generation and continues to prioritise debt repayment, with a further £1.0 million paid down in FY24. Net debt (excluding IFRS 16 leases) has reduced from £4.7 million at December 2023 to £3.7 million at December 2024.

• The strategic changes made in Q1 2025, which is estimated to deliver annualised cost savings of c£2.0 million, is expected to accelerate a reduction in net debt.

John Varney, Non-Executive Chairman, commented:

"I am pleased FY25 has started in line with our expectations, and that we are already seeing the benefits of the cost saving initiatives and strategic actions taken during Q1.

The potential for future growth, together with our expectation that improved cash generation will accelerate the repayment of our debt, means that the Board remains confident in the Company's ability to become a highly profitable business with a healthy cash position. This will put us in an excellent position to consider M&A investment, adding technology product offerings, and potentially paving the way for improving shareholder returns".

* Adjusted EBITDA is defined as operating profit or loss before depreciation, amortisation and impairment of 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 impairment of intangibles, share based payment expense, non-recurring items and exchange gains and losses.

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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 leading global software business specialising in playout automation and integrated channel solutions for the broadcast and streaming markets. 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

Industry conditions remain challenging with customers tending to look to hybrid operating models, thus delaying full adoption of IP (Internet Protocol) infrastructure. This, along with the timing of project orders, has led to the Group reporting results below initial market expectations, as previously announced. However, recurring revenues continue to increase, driven by the levelling up of our premium SLAs to 15% of their system list price.

On the back of the continued market delays in the adoption of cloud native IP solutions, as reported on 14 January 2025, the Board took decisive strategic action in Q1 2025. The strategic plan implemented by the Board included (i) the scaling-back of ongoing investment in PRIMA until market demand warrants further investment and (ii) a renewed focus on our existing core capabilities as a broadcast solutions specialist. PRIMA remains in excellent, ready-for-use shape, with the first iteration already complete with full platform and basic automation capabilities.

As a result of these actions, the company has significantly reduced its existing cost base with estimated annualised cash savings of approximately £2.0 million and, consequently, sustainable free cash inflows are anticipated to also increase materially in FY25 and beyond.

With the strategic action taken in the first quarter of this financial year, together with the growing recurring revenue stream from SLAs and ongoing project delivery, the Group is targeting a net cash position by mid-2026.

FINANCIAL PERFORMANCE

Order intake of £13.6 million was 24% up on 2023 total order intake (FY23: £11.0 million). This was driven by a 56% increase in Service Level Agreement ("SLA") orders year on year, with £7.5 million booked in FY24 (FY23: £4.8 million). Project orders remain flat year on year with £6.1 million booked in 2024 (FY23: £6.2 million). The timing of these orders, with 45% of them placed in Q4 and therefore the inability to recognise the revenues in FY24, led to reduced project revenue for the Group.

Revenue in FY24 was down 7% at £11.5 million (FY23: £12.4 million). However, recurring revenue from support, maintenance and subscription arrangements within the Group's contracts was up 17% to £6.1 million (FY23: £5.2 million). I am pleased to report that recurring revenue represents 53% (2023: 42%) of total revenue and provides good visibility for future revenue given the long term nature of many of the contracts. We expect the upward trend in recurring revenue to continue over 2025.

Gross profit was £8.8 million (FY23: £9.5 million) with a gross margin of 77% (FY23: £9.5 million at a margin of 77%).

Adjusted EBITDA was £3.3 million (FY23: £3.8 million), representing an Adjusted EBITDA margin of 29% (FY23: 31%). The reduction in Adjusted EBITDA is a result of the delays in the signing of project orders, and therefore lower project revenues in 2024.

An operating loss was incurred of £0.8 million (FY23: operating profit of £2.1 million) driven largely by a one-off impairment of intangibles; larger exchange losses of £0.1 million (FY23: £0.03 million) incurred during the year compared to the prior year as well as increased non-recurring costs year on year. An intangibles impairment review in line with accounting standards resulted in a one-off £2.7 million impairment charge being recognised in 2024.

Conversion of profit to cash remained strong in 2024 with 126% of Adjusted EBITDA converted to cash generated from operations (FY23: 104%) allowing our continued investment in new products and services at the same time as continuing to reduce our levels of debt.

In the year, we capitalised £2.2 million of development costs and amortised £0.8 million, excluding the impact of the one-off intangible asset impairment review (FY23: capitalised £2.1 million and amortised £1.3 million). The one-off impairment charge relates to PRIMA. An impairment review was carried out in line with IAS 36 as the delay in the market uptake for IP native broadcast solutions indicated the asset value might be impaired. As a consequence of the Group expecting to supply its existing product range for longer than anticipated due to the slow uptake of IP native solutions the estimated useful life of the existing products has been increased resulting in a lower amortisation charge in the year and going forward.

R&D expenditure as a proportion of revenue increased slightly to 24% (FY23: 21%).

Net finance costs increased in 2024 reflecting the Group's repayment of £1.0 million of its term loan which was more than offset by an increased interest rate of 9.77% (FY23: 8.80%). Adjusted profit post tax which excludes share based expenses or credits, foreign exchange losses, exceptional items and the impairment of intangibles was £1.1 million (FY23: £1.7 million) and adjusted earnings per share was 0.9p (FY23: 1.4p). This year on year decrease is a result of reduced profitability arising from reduced project revenue.

The reported loss before tax for the year was £1.3 million (FY23: profit before tax £1.5 million). This resulted in an earnings per share of (1.1p) (FY23: 1.2p).

Net debt (excluding IFRS 16 leases) at the year end was reduced by £1.0 million to £3.7 million (FY23: £4.7 million), comprising bank debt of £4.5 million (FY23: £5.5 million) and a cash position at year end of £0.8 million (FY23: £0.8 million).

TERM LOAN

We continue to enjoy a good relationship with our bank, Santander, who remain very supportive of the Group. In March 2024 we agreed a new long-term facility with Santander, refinancing the £5.5 million loan facility until 31 October 2026. The new agreement has the same covenant tests as the last agreement and a repayment schedule consistent with previous years.

MARKET POSITIONING

Pebble is a leading global software business specialising in playout automation and integrated channel solutions for the broadcast and streaming markets.

Pebble's primary product offering is playout automation to execute linear schedules and live event programming for broadcast channels and streaming services. This market primarily consists of television broadcast companies and service providers that offer outsourced services for the broadcasters. This global market is typified by Pebble customers such as Fox News, CNBC, IMG, TV Globo. The market also includes some major streaming services, particularly those carrying live content.

Pebble's other core software technology is the management and processing of media associated with broadcast and streaming services, both file-based media and live media streams. This processing includes the composition of graphics, video effects, audio processing, and ancillary services such as subtitles and captioning. Pebble addresses all the requirements of modern broadcast services.

All Pebble's solutions are designed to meet the demanding mission critical requirements of broadcast operations. From compliance with demanding security requirements, to sophisticated resilience to ensure complete on-air reliability, our solutions are architected to achieve the highest levels of performance.

Pebble's customer centric culture is widely recognised as providing market leading service. We manage the customer relationship through the entire system lifecycle, leveraging our deep domain knowledge to deliver solutions tailored to our customers' specific needs, and to provide 24/7 in life support of their solutions.

Pebble's portfolio of software-based solutions consists of:

Automation: highly scalable enterprise level playout solution for broadcasters, streamers, and service providers with built around best-of-breed technology. The software allows flexible deployment either on premises, on virtual machines or in the cloud with exceptional levels of system resiliency.

Integrated Channel: under the control of our Automation software this solution provides all the functionality of a broadcast chain including audio, video and graphics functionality.

Remote: real-time, thin-client access to the playout environment via secure web interfaces. It is easy to use with intuitive interfaces to control, monitor and manage channels remotely.

Control: provides connection management of IP devices suitable for TV stations, OB trucks, production houses or anywhere that uses IP workflows.

Workflow: a tool for the design and management of complex media workflows. Handles the ingest, indexing, and movement of media to support broadcast channels and streaming services.

MARKET OPPORTUNITY AND PRODUCT DEVELOPMENT ROADMAP

In 2024, Pebble introduced a new technology platform PRIMA (Platform for Real-time Integrated Media Applications). Notwithstanding excellent industry interest in the product following its launch, it was apparent that this interest was not translating into orders as the industry remained cautious on the adoption of cloud native IP solutions for mission critical broadcast software. As a result the Board took the view that specific PRIMA R&D should be scaled back until such time as market demand warrants further investment. The short term focus will be on the existing core capabilities as a broadcast solutions specialist. Pebble will continue its development of its existing playout and integrated channel products and services for current customers and new prospects.

Multi-platform content delivery

For Pebble, multi-platform content delivery is its ability to deliver complex workflows to support our customers' linear and on-demand requirements, Video On Demand, OTT and On-demand. This forms the core of our current revenue streams and as such we are continuing to develop the capabilities of these existing technologies.

4K/UHD production

4K and UHD TV global sales have consistently increased since 2014 according to recent industry statistics. Pebble has already delivered a number of UHD systems to customers.

IP infrastructure

IP infrastructure has been an area of focus for Pebble for some time, in line with customers' stated requirements and we continue to cement our position as the experts in IP. Although many of our customers are typically either transitioning to IP infrastructure from legacy SDI (traditional non-IP digital video) deployments or are implementing IP infrastructures in a new broadcasting facility or greenfield site a considerable number are continuing to operate in hybrid IP/SDI environments. Pebble supports all of these implementations.

Cloud Compute: Public, Private, & Hybrid

As broadcast and streaming services evolve, the media technology industry is constantly seeking more flexible and efficient use of IT infrastructure. Use of cloud compute is a significant trend in the market, and this is a combination of public services such as Amazon and Google, private cloud deployed on a customer's own infrastructure, and hybrid which is a combination of both.

To date Pebble has delivered systems into a small number of new IT centric playout facilities. Our solutions have primarily been supporting broadcasters as they expand their current SDI based facilities to utilise cloud capabilities.

To complement Pebble's development roadmap and to broaden the Group's product offering, Pebble is also looking for in-organic opportunities in these areas that would accelerate the diversification of the company's portfolio. Areas of specific focus for potential acquisition opportunities are production functions such as graphics, and file-based workflows supporting on-demand streaming applications, media planning, scheduling, advertising, and distribution.

GOING CONCERN

The directors are required to assess the Group's ability to continue to trade as a going concern. The Board concluded, from its thorough assessment of the detailed forecasts, that the Group will have sufficient resources to meet its liabilities during the review period through to 30 September 2026 and that it is appropriate that the Group prepare accounts on a going concern basis. Detailed disclosure has been made in note 3.

BOARD CHANGES

There were no changes during the period.

TRADING OUTLOOK

Despite a challenging 2024, this year has started well, in line with our expectations, and we have a healthy order pipeline. Our loyal customers continue to enjoy our excellent technology and the high level of service they expect from the Pebble brand. We remain fully focussed on being experts in delivering leading playout and content management solutions for the broadcast and media technology industry.

FY25 for the Group will be a year of focussing on our strategy, ensuring Pebble remains highly profitable, whilst significantly improving cash generation.

This strategy will give Pebble increased options for future growth. The additional funds generated will give the flexibility to accelerate pay down of the long-term debt and to consider M&A investment, adding technology product offerings, and potentially paving the way for improving shareholder returns.

John Varney

Non-Executive Chairman

For the year ended 31 December 2024

CONSOLIDATED STATEMENT OF PROFIT AND LOSS

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2024

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2024

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

for the year ended 31 December 2024

1. GENERAL INFORMATION

Pebble Beach Systems Group plc ("the Company") and its subsidiaries (together "the Group") is a leading global software business specialising in playout automation and content management solutions for the broadcast and streaming markets.

The Group employed over 90 people worldwide in the period.

The Company is listed on the AIM market of the London Stock Exchange (AIM: PEB). For further information, visit www.pebbleplc.com.

The Company is incorporated and domiciled in the UK. The address of its registered office is Unit 1, First Quarter, Blenheim Road, Epsom, Surrey, KT19 9QN.

The registered number of the Company is 04082188.

This results announcement was approved for issue at close of business on 22 April 2025.

2. BASIS OF PREPARATION

The financial information contained in these condensed financial statements does not constitute the Group's statutory accounts within the meaning of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2024 and 31 December 2023 have been reported on by S&W Partners Audit Limited (formerly CLA Evelyn Partners Limited) with an unmodified audit opinion and did not include references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

Whilst the financial information included in this Annual Financial Results announcement has been computed in accordance with UK-adopted international accounting standards, this announcement, due to its condensed nature, does not itself contain sufficient information to comply with UK-adopted international accounting standards.

Statutory accounts for the year ended 31 December 2023 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2024, prepared under UK-adopted international accounting standards, will be available on the Group's website: https://www.pebbleplc.com and will be delivered to the Registrar in due course. The Group's principal accounting policies as set out in the 2024 statutory accounts have been applied consistently in all material respects.

3. GOING CONCERN

The directors are required to assess the Company's and the Group's ability to continue to trade as a going concern.

At 31 December 2024, the Group's net debt (excluding IFRS 16 leases) was £3.7 million (2023: £4.7 million), comprising cash of £0.8 million (2023: £0.8 million) and the term loan from Santander of £4.5 million (2023: £5.5 million).

We enjoy a close relationship with our bank and have regular review meetings with them. In March 2024, we signed a new term loan through to 30 October 2026, which re-financed the £5.5 million RCF at the same level of commitment, with repayment levels consistent with previous years and appropriate financial covenants. There have been no breaches in financial covenants to date and no breaches are anticipated in the going concern period. Following the conclusion of the re-structuring process, management are forecasting a stronger cashflow forecast through 2025.

The directors are confident that any loan extensions required post October 2026 would be granted on reasonably similar terms given the historic track record.

To assess the appropriateness of preparing financial statements on a going concern basis, management prepared detailed projections of the consolidated statement of profit and loss, the statement of financial position and cash flow statements through to 30 September 2026. This review period extends to the end of Q3 for 2026, which is looking forward 17 months beyond the date of approval of these financial statements. The projections included testing against the minimum liquidity and cash flow cover covenants required by the current term loan facility.

These projections used the forecast for 2025 and were updated for current trading and forecasts. This analysis was then extended to the end of Q3 2026. The projections were stress tested in two ways. Project orders for 2025 were reduced by 10%, then reduced by 20% with no year on year SLA growth applied. The existing support service contracts, where revenue is recognised over time were assessed based on historic renewal rates, to establish the likely renewal of this recurring revenue. Management reviewed the levels of marketing and discretional bonus spend to mitigate any reductions in revenue. Even with the revenue drop, management concluded the business will remain a going concern. The Board has concluded from its thorough assessment of the detailed forecasts and ability to enact any mitigating actions, if required, that the Group will have sufficient resources to meet its liabilities during the review period through to 30 September 2026, that it will meet the bank covenants and that it is appropriate that the Group and the Company prepare accounts on a going concern basis.

4. SEGMENTAL REPORTING

The Group's internal organisational and management structure and its system of internal financial reporting to the Board of directors comprise of Pebble Beach Systems and PLC costs. The chief operating decision-maker has been identified as the Board.

The Board reviews the Group's internal financial reporting in order to assess performance and allocate resources. Management have therefore determined that the operating segments for the Group will be based on these reports.

The Pebble Beach Systems 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 or loss from continuing operations by business segment.

Geographic external revenue analysis and revenue by stream

The revenue analysis in the table below is based on the geographic location of the customer for each business.

Net assets

The table below summarises the net assets of the Group by division. The statement of financial position reporting is disclosed by the divisional assets and liabilities of the Group as this is consistent with the presentation of internal information provided to the Executive Management and the Board of Directors.

5. OPERATING PROFIT OR LOSS

The following items have been included in arriving at the operating profit for the continuing business:

Non-recurring items

The following items are excluded from management's assessment of profit because by their nature they could distort the annual trend in the Group's earnings. These are excluded to reflect performance in a consistent manner and are in line with how the business is managed and measured on a day-to-day basis:

6. 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.

*Due to the loss for the year for 2024 share options were anti-dilutive and so removed from the calculations for diluted EPS

Adjusted earnings

The directors believe that adjusted EBITDA, adjusted earnings and adjusted earnings per share all provide additional useful information on annual 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 under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. The principal adjustments to earnings are made in respect of the impairment of 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:

7. INTANGIBLE ASSETS

In accordance with the requirements of IAS 36 'Impairment of assets', intangible assets are required to be tested for impairment on an annual basis, or where there is an indication of impairment, with reference to the value of the asset or cash-generating units ("CGU") in question.

There is an indicator of impairment for one of our intangible assets (part of capitalised development costs). The indicator is the delay in market adoption of IP technologies.

Following an assessment of our IP native assets, with reference to value in use; forecast cash outflows are estimated to exceed cash inflows in the foreseeable future. It was not possible to determine a fair value less cost of disposal as there is currently no active market for the sale of this technology. Therefore we recorded an impairment loss of £2.7 million in respect of this asset.

Following an assessment of our intangible assets it became apparent that the useful economic life of the Group's current intangible assets (capitalised development costs) is longer than originally thought. The period in which economic benefits are expected to flow to the Group from our existing products is longer than originally thought. Due to the delayed market uptake of IP technology customers are continuing to invest in on-prem solutions. Originally the amortisation period was between one and five years. We now believe the amortisation period should be eight years. This change has been accounted for as a change in accounting estimate in accordance with IAS 8.

8. CASH FLOW GENERATED FROM OPERATING ACTIVITIES

Reconciliation of profit or loss before taxation to net cash flows from operations.

9. NET FUNDS

Net debt reconciliation:

10.  EVENTS AFTER THE REPORTING PERIOD

Global market delays to the transition to IP broadcast technology led to a Group strategic change in 2025. Specific PRIMA research and development has been scaled back until the market demand warrants further investment in it and, as a result, a restructure of the Group was carried out during Q1 2025. This announcement was made on 14 January 2025. The estimated financial effect of this is cost savings of c£2 million from implementation date.

The directors placed the non-trading Legacy Broadcast subsidiary companies into a solvent liquidation process on 25 February 2025. The financial effect of this will be negligible.

The Board is pleased to confirm that following the publication of its audited results for the year ended 31 December 2024, the annual report and financial statements will be posted to shareholders on 16 May 2025 and a copy will also be available to download from the Group's website at pebbleplc.com.

Ends