Pebble Beach : A leading global software business specialising in playout automation and content management solutions for the broadcast and streaming service markets.

Pebble Beach Systems Group plc

A leading global software business specialising in playout automation and content

management solutions for the broadcast and streaming service markets.

ANNUAL REPORT 2021

Pebble Beach Systems Group plc

Annual Report & Financial Statements for the year ended 31 December 2021

www.pebbleplc.com Stock code: PEB

CONTENTS

STRATEGY

1	Business Overview
2-4	Non-Executive Chairman's Statement
5-11	Strategic Report

GOVERNANCE

12-13 The Board

14-17 Directors' Report

18-24 Corporate Governance Statement

25-28 Remuneration Report

FINANCIALS

29-40 Independent Auditor's Report

To The Members of Pebble Beach Systems Group plc

1. Consolidated Income Statement
2. Consolidated Statement of Comprehensive Income
3. Consolidated Statement of Financial Position
4. Consolidated Statement of Changes in Shareholders' Equity
5. Consolidated Statement of Cash Flows

46-80 Notes to the Consolidated Financial Statements

1. Company Income Statement
2. Company Statement of Financial Position
3. Company Statement of Changes in Shareholders' Equity
4. Company Statement of Cash Flows

85-97 Notes to the Company Financial Statements

COMPANY INFORMATION

1. Analysis of Shareholders
2. Shareholder Information

STRATEGY

BUSINESS OVERVIEW

PEBBLE BEACH SYSTEMS GROUP PLC

Pebble Beach Systems Group plc (Pebble) is incorporated in England (company registration number 04082188) and has its registered office at 12 Horizon Business Village, 1 Brooklands Road, Weybridge KT13 0TJ. The Group comprises Pebble Beach Systems Limited and its subsidiary companies.

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 2,000 channels currently on air under the control of its 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.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

• Strong performance as business successfully adapted to the Covid pandemic with revenue up 27% on 2020. Recurring revenue from support contracts up 15% to £4.6 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%.
• Increased investment in new digital platform to establish all-IP workflows
• Strategic move to a fully 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 £1m with net debt at year end of £5.9 million (2020: £7.7 million)
• Bank facilities re-negotiated in April 2022 with term loan facility to 30 September 2024

www.pebbleplc.com Stock code: PEB

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NON-EXECUTIVE 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 £13.7 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 £10.6 million (2020: £8.4 million) including recurring revenue from support contracts up

15% to £4.6 million (2020: £4.0 million). Recurring revenue represents 43% of total revenue and provides greater visibility of future years' forecasts.

Gross profit was £8.1 million at a margin of 77% (2020: £6.4 million at a margin of 77%).

Adjusted EBITDA was £3.3 million (2020: £2.7 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 £1.5 million of development costs (amortised £0.9 million), (2020: capitalised £1.3 million) (amortised £0.8 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 £1.0 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 £1.5 million (2020: £1.1 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 £1.8 million to £5.9 million (2020: £7.7 million), comprising a much- improved cash position at year end of £1.6 million (2020: £0.8 million) and debt of £7.5 million (2020: £8.5 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 £7.15 million RCF agreement. The new term loan secures a £7.15 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.

02 Pebble Beach Systems Group plc Annual Report & Financial Statements for the year ended 31 December 2021

STRATEGY

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-shopfor 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-onlyimplementation 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-containedPlayout 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.

www.pebbleplc.com Stock code: PEB

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