19 March 2024
The information
communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations
(EU) No.596/2014 which is part of UK law by virtue of the European
Union (withdrawal) Act 2018. The information is disclosed in
accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this
inside information is now considered to be in the public
domain.
THE PEBBLE GROUP PLC
("The Pebble
Group", the "Group" or the "Company")
AUDITED FULL YEAR RESULTS
2023
Performance in line with revised expectations and well-placed
for return to growth
The Pebble Group, a leading
provider of digital commerce, products and related services to the
global promotional products industry, announces its audited results
for the year ended 31 December 2023 ("FY 23").
The results are in line with
revised expectations as set out in the trading update on 22
November 2023 as a result of continued growth in Facilisgroup and
reduced revenue at Brand Addition stemming from a contraction in
spend among Technology and Consumer clients.
Commenting on the results, Chris Lee, Chief Executive Officer
of Pebble Group said: "Both
Facilisgroup and Brand Addition retain attractive fundamental
strengths, are differentiated in their respective markets and have
clear strategic plans to grow in the very large global but
fragmented promotional products industry. With a robust balance
sheet that has enabled investment in new technology product
initiatives and further development on its progressive dividend
policy, the Group remains well-placed to return to growth in 2024,
with exciting opportunities to scale further. Trading in 2024 has
started in line with management's
expectations."
·
|
Group revenue
of £124.2m (FY 22: £134.0m), 7% behind the prior
year.
|
·
|
Facilisgroup: Annual Recurring
Revenue grew by 12% to USD21.2 million (FY 22: USD19.0m) with
attractive Adjusted EBITDA margins of 50% (FY 22: 54%).
|
·
|
Brand Addition: Revenue decreased
by 9% to £106.3m (FY 22: £117.4m) due to impact of reduced spend
from the Technology and Consumer sectors.
|
·
|
Gross profit margin increased 4.3
percentage points to 43.6% (FY 22: 39.3%) as a result of increased
value delivered by Brand Addition to its clients and the growing
proportion of Facilisgroup as a percentage of overall Group
sales.
|
·
|
Strong balance sheet with net cash
of £15.9m at 31 December 2023, an increase of £0.8m
compared with 31 December 2022.
|
·
|
Further development on progressive
dividend policy, with the Board proposing to increase dividend to
1.2 pence per share at FY 23 (FY 22: 0.6 pence per share) and
intending to implement in the near-term a share buy-back programme
in the Company's Ordinary Shares up to a maximum aggregate
consideration of £5.0m.
|
Financials
Statutory results
|
FY
23
|
FY
22
|
Change
|
Revenue
|
£124.2m
|
£134.0m
|
-7%
|
Gross profit margin
|
43.6%
|
39.3%
|
+4.3ppt
|
Operating profit
|
£8.0m
|
£10.2m
|
-22%
|
Profit before tax
|
£7.4m
|
£9.7m
|
-24%
|
Basic earnings per share
|
3.46p
|
4.55p
|
-24%
|
Other financial
highlights
|
FY
23
|
FY
22
|
Change
|
Adjusted
EBITDA1
|
£16.0m
|
£18.0m
|
-11%
|
Net cash2
|
£15.9m
|
£15.1m
|
+5%
|
Adjusted basic earnings per
share3
|
4.60p
|
5.78p
|
-20%
|
Dividend
|
1.2p
|
0.6p
|
+100%
|
1
|
Adjusted EBITDA means operating
profit before depreciation, amortisation and share-based payments
charge
|
2
|
Net cash is calculated as cash and
cash equivalents less borrowings (excluding lease
liabilities)
|
3
|
Adjusted basic earnings per share
("EPS") represents Adjusted Earnings meaning profit after tax
before amortisation of acquired intangible assets, share-based
payments charge and exceptional items divided by a weighted average
number of shares
|
Online investor
presentation
The management team is hosting an
online investor presentation with Q&A at 3:00pm on Thursday, 21
March 2024. To participate, please register with PI World
at: https://bit.ly/PEBB_FY23_results_webinar
Enquiries:
The Pebble Group
Chris Lee, Chief Executive
Officer
Claire Thomson, Chief Financial
Officer
+44 (0) 750 012 4121
|
Temple Bar Advisory (Financial PR)
Alex Child-Villiers
Sam Livingstone
+44 (0) 207 183 1190
pebble@templebaradvisory.com
|
Grant Thornton UK LLP (Nominated Adviser)
Samantha Harrison / Harrison
Clarke / Ciara Donnelly
+44 (0) 207 184 4384
|
Berenberg (Corporate
Broker)
Ben Wright / Mark Whitmore /
Richard Andrews
+44 (0) 203 207
7800
|
About The Pebble Group
The Pebble Group is a provider of
digital commerce, products and related services to the global
promotional products industry, comprising two differentiated
businesses, Facilisgroup and Brand Addition, focused on specific
areas of the promotional products market. For further information,
please visit www.thepebblegroup.com.
CHAIR'S REPORT
Overview
The Group continued to make good progress
against its long-term strategy to be a key influencer in the
promotional products industry globally through the provision of its
digital commerce technology to independent promotional products
distributors and the sourcing and supply of high quality,
sustainable and innovative products to many of the world's leading
brands.
The Group achieved revenue in the year of
£124.2m (FY 22: £134.0m) and adjusted EBITDA of £16.0m (FY 22:
£18.0m) which was in line with the guidance given in our trading
update issued on 22 November 2023.
The Group balance sheet remains strong with
Group net cash at 31 December 2023 of £15.9m, up from £15.1m a year
earlier. The strong cash position enabled the business to pay a
maiden dividend of 0.6 pence per share for FY 22 and we propose to
increase this to 1.2 pence per share for FY 23.
The Group's divisions, Facilisgroup and Brand
Addition, continue to invest in new technology, with the objective
of creating market leading differentiation to win new clients and
underpin the Group's long-term growth.
Our market
and strategy
Facilisgroup and Brand Addition, together
process transactions either directly or indirectly which accounts
for approximately 3% of all promotional products sold globally and
approximately 6% of promotional product transactions in our
strategically important North American market.
This gives the Group a good level of insight
into the trends and development of the promotional products market
and enables us to plan our future strategy accordingly.
Our market insight shows that:
·
|
the global market for promotional products is
very fragmented. The majority of the market is being served by
owner managed SMEs with a high concentration in North America. As
technology proliferates, SME distributors have a need for digital
commerce platform technology to support their efficiency and
growth; and
|
·
|
high quality, sustainable promotional products
continue to be a key strategic component of the brand building,
employee engagement and customer reward strategies of the majority
of large businesses and major brands around the world.
|
The Group addresses these market needs through
its Facilisgroup and Brand Addition divisions,
respectively.
Our
businesses
Facilisgroup
Facilisgroup revenue grew by 9% over the year
on a constant currency basis to $22.2m (FY 22: $20.4m) which
equated in Sterling terms to £17.9 (FY 22: £16.6). EBITDA margin
performance remained robust at circa 50%.
The strong profitability and cash generated by
Facilisgroup is enabling the business to invest into new technology
aimed at enabling Facilisgroup to become the leading provider of
digital commerce software and services to the large number of
independent promotional products distributors across North America.
The vision of the Facilisgroup team is a clear and compelling one,
which represents a significant strategic opportunity for the
Group.
Brand
Addition
Brand Addition sells promotional products to
many of the world's largest brands with a focus on quality,
sustainability and innovative design. Sales in the year to 31
December 2023 were £106.3m down from £117.4m in the previous year.
The business retained all major clients during the year and,
through its positive differentiation, was able to increase its
gross margins by 3.4 percentage points. However, the mix of
business across Brand Addition was skewed more towards
underperforming rather than overperforming sectors, particularly in
the second half of the year. This resulted in a shortfall against
the revenue expectations at the start of the year.
Dividend
Last year the Group announced the payment of
its first dividend since the IPO and said it was the intention of
the Board for this to be progressive, moving in the medium-term to
our stated position at IPO of making dividend payments each year of
circa 30% of profit after tax. In line with that policy, the Group
is proposing an increase in the final dividend to 1.2 pence per
share for the financial year ended 31 December 2023.
Environmental, Social and
Governance
Investing in achieving our strategy with a
sustainable impact is central to the Group's values and our ESG
priorities remain high on the Group Board's agenda. We publish our
third ESG report in March 2024 to provide a comprehensive review of
the meaningful action we are taking, which we believe, is an
opportunity to differentiate the Group by sharing the progress we
have made against our commitments.
In the ESG section of our 2023 Report and
Accounts, we update on the continued progress the Group is making
in reducing its environmental impact and in engaging with suppliers
to encourage the reduction in their Greenhouse Gas emissions.
In October 2023, the Group was awarded The Race Equality Code
Quality Mark which recognises our efforts and future commitments to
Diversity, Equity and Inclusion (DEI) in the workplace.
From a governance perspective, the appointment
of David Moss as our new Non-executive Director to enhance the
Group Board's technology experience and skillset was a particular
highlight. David was a co-founder and CTO of Blue Prism which was
an AIM listed company for 6 years before being bought by SS&C
Technologies Holdings, Inc. in 2022.
Team and
Board
At The Pebble Group, the Group Board and the
Executive Leadership Team believe that the businesses'
accomplishments are achieved because of its talented and diverse
teams. The Group is led by a Board with a wide diversity of skills
and experience, supported by highly engaged and motivated teams
across the businesses. We encourage diversity, actively engage with
our teams on an ongoing basis, and are focussed on investing in and
developing our people.
Outlook
Trading in 2024 is progressing in line with
management expectations. In light of the Board's confidence in the
return to growth and to enhance shareholder returns, the Board
intends in the near-term to implement a share buy-back programme in
the Company's Ordinary Shares up to a maximum aggregate
consideration of £5.0m. A further announcement will be made in due
course.
We look forward to providing a further update
on progress at our Annual General Meeting on 30 April.
Richard
Law
Chair
18 March
2024
CHIEF EXECUTIVE OFFICER'S
REVIEW
Introduction
The Group's results for the year
ended 31 December 2023 are in line with the revised expectations as
set out in our trading update of 22 November 2023.
Group revenue was £124.2m, a decrease of 7% on
the prior year (FY 22: £134.0m), being the net effect of the
continued growth in Facilisgroup and reduced sales with a
particular cohort of clients at Brand Addition. We describe the
nuances of this in the Business Review below.
Group Adjusted EBITDA was £16.0m, a decrease
of 11% (FY 22: £18.0m). Net cash after a dividend payment of £1.0m
in June 2023 remains strong, being £15.9m at 31 December 2023 (31
December 2022: £15.1m).
Acknowledging the disappointment
of reporting FY 23 results lower than FY 22, it is important to
reiterate that there has been no change to the underlying
opportunities for our businesses. In the Business Review, I set out
why I believe the intrinsic strength and growth prospects for both
Facilisgroup and Brand Addition remain compelling.
Business
Review
Facilisgroup: providing a digital commerce platform
for promotional products businesses in North
America
£'m
|
FY
23
|
FY 22
|
ARR
|
£17.0m
|
£15.5m
|
Other revenue
|
£0.9m
|
£1.1m
|
Total revenue
|
£17.9m
|
£16.6m
|
Gross profit
|
£17.9m
|
£16.6m
|
Gross profit margin
|
100%
|
100%
|
Adjusted EBITDA
|
£8.9m
|
£9.0m
|
Operating profit
|
£4.4m
|
£5.0m
|
FY 23 revenue of £17.9m (FY 22: £16.6m) was 8%
ahead of the prior year with Annual Recurring Revenue (ARR) in USD
(Facilisgroup home currency) of USD21.2m (FY 22: USD19.0m),
representing 12% growth over the prior year. The
vast majority of revenue is derived from our market leading Syncore
technology product. The activities that underpinned the FY 23
revenue and heavily influence the future recurring revenue stream
are:
-
|
Partner numbers: 7.6% increase to 242 at 31
December 2023 (31 December 2022: 225);
|
-
|
Gross Merchandise Value (GMV): FY 23 USD1.42bn
(FY 22: USD1.40bn). This breaks down as a 9% growth in H1 23
and a 5% decline in H2 23 as the trading environment of our
Partners toughened; and
|
-
|
Spend with our Preferred Suppliers: FY 23
USD0.47bn (FY 22: USD0.46bn). Moving in line with the
dynamics of Partner GMV, it is the reduction of these transactions
in H2 23 that slowed the rate of revenue growth of Facilisgroup in
FY 23.
|
A major strength of Facilisgroup
is its revenue to profit conversion. This continued in 2023 with
Adjusted EBITDA margins of 50% (FY 22: 54%) achieved while
investing in our team, including product sales and marketing, to
support Partner retention and bringing our new technology to
market.
Operating profit was £4.4m (FY 22: £5.0m),
reflecting the amortisation charge on our investment in new
technology as we expense a proportion of the
products that are yet to make a material impact on our
revenues.
Facilisgroup has a highly
attractive business model. Building on the financial results
described above, the business has consistently produced strong SaaS
metrics. To illustrate this, at the end of FY 23, there
was:
-
|
17%, four-year Revenue Compound Annual Growth
Rate;
|
-
|
50%, Adjusted EBITDA margin;
|
-
|
25%, Operating profit margin;
|
-
|
102%, Net Retention Rate on Syncore technology
subscription to Partners; and
|
-
|
97%, Partner Retention Rate.
|
|
|
Approach to the market
Facilisgroup Partners are
attracted to the business through its provision of a combination of
technology, supply chain network and community belonging. The GMV
being managed through our platform in 2023 was USD1.4bn
representing circa 6% of the USD25bn North American Promotional
Products industry, giving the business great market
insight.
Our strategy is to scale
Facilisgroup revenues firstly, via the continued development and
responsible growth in market share of our established Syncore
product. Our expectation is that the ongoing capital investment
relating to Syncore will continue at its current amount of circa
£2.5m per annum, being approximately
15% of FY 23 revenue.
Secondly, we have chosen to
allocate a further proportion of the business's own cash generation
into developing new technology products. These are aimed at both
widening the opportunity to provide existing Partners with other
services, plus expanding our addressable market. This capital
investment was approximately £3.0m in FY 23. Looking forward, the
level of the investment into these new products will be entirely
based upon our assessment of the market, customer feedback and the
revenues these investments will generate.
Our current go to market strategy
is through:
-
|
Syncore: our established order
workflow product focused on high quality, growing SME distributors
in North America with sales of greater than USD2m. We estimate
there is a total addressable market of circa 1,600 businesses
against the 242 contracted at 31 December 2023 (31 December 2022: 225);
|
-
|
Commercio Stores: built
specifically to support the needs of the promotional products
industry, Commercio Stores allows distributors of all sizes to
create ecommerce stores for their customers that can either stand
alone or integrate into our order workflow technology. At 31
December 2023 there were 56 paying customers using this technology
(31 December 2022: 130 non-paying); and
|
-
|
Orders: our order workflow product
for the many thousands of smaller distributors with less than USD2m
sales is in development. At 31 December 2023 there were 45
non-paying Beta customers using this technology (31 December 2022:
Nil).
|
Trading in 2024 has started in line with
management expectations. Partner numbers at 18 March 2023 were 236
as a result of 5 Partners being acquired and the exit of 3 Partners
with a lower than average value of GMV. The key metrics of GMV
transactions and spend through Preferred Suppliers to date, are
both ahead of the same period in 2023.
Brand
Addition: providing promotional products and
related services under contract to many of the world's most
recognisable brands
£'m
|
FY
23
|
FY 22
|
Revenue
|
£106.3m
|
£117.4m
|
Gross profit
|
£36.3m
|
£36.1m
|
Gross profit margin
|
34.1%
|
30.7%
|
Adjusted EBITDA
|
£9.5m
|
£11.5m
|
Operating profit
|
£6.2m
|
£8.0m
|
FY 23 revenue of £106.3m (FY 22:
£117.4m) was 9% lower than the prior year. The revenue decrease in
the year was concentrated on our clients that operate in the
Technology and Consumer sectors. Importantly, client retention
remains strong. Technology sector client budgets were affected as
they reduced their employee numbers and Consumer sector clients
spend has reduced in the last two years following a peak in 2021.
These clients all remain contracted with Brand Addition, are
amongst the best-known brands in the world, and continue to deliver
a repeatable revenue stream over the medium-term.
Reviewing the business beyond a
single set of results, Brand Addition has built close, long-term
client and supplier relationships. As brand control, product
efficacy and international consistency becomes even more important
to large global brands, Brand Addition has provided additional
services such as multi-country service delivery, global
distribution management and sustainable product initiatives. The
value placed by clients on these additional services is
demonstrated by the increase in its gross margins to 34.1% (FY 22:
30.7%). We therefore revise up our gross margins long-term average
to circa 33% from the previously guided 30%.
Despite the recent contraction in
demand in the Technology and Consumer client sectors in the year,
the underlying strengths and growth prospects of Brand Addition
remain highly attractive. To illustrate this, at the end of FY 23,
there was:
-
|
a large total addressable market
of circa $4 billion;
|
-
|
circa 800 global opportunities on
Brand Addition's target list;
|
-
|
excellent client retention rates
to well-known global brands;
|
-
|
highly repeatable revenues over
the medium-term; and
|
-
|
a 3.4%, increase in margins
reflecting the widening of services delivered to
clients.
|
Approach to the market
There is a large addressable
market for the specialist services offered by Brand Addition.
International corporates use promotional products to engage with
their employees, customers, and wider stakeholders. This includes
Consumer Promotions to support businesses in driving their own
sales volumes and Corporate Programmes to support employee
engagement and brand building activities.
These categories of marketing
spend are outsourced under contract because brands wish to have
control over:
-
|
thoughtful and creative bespoke
products to carry their brand and engage their
stakeholders;
|
-
|
product quality and supply chain
assurances to protect their brand integrity; and
|
-
|
a consistent international
strategy.
|
Trading in 2024 has started in line with
management expectations with the sector specific sales challenges
experienced in H2 23 currently following anticipated order intake
trends.
People and Environmental, Social and
Governance
Our Group comprises of
approximately 560 people based across multiple geographies. Our
team's talent and dedication in developing long-term relationships
with our Partners, clients and suppliers is the foundation of our
businesses' success. Our people are a consistent strength and my
thanks go to everyone at Facilisgroup, Brand Addition and The
Pebble Group.
The Group Board also sends its
appreciation to Ashley McCune who left Facilisgroup in October 2023
after 16 years with the business, culminating as Facilisgroup
President from 2020 until her departure. This change led to me
taking a larger role in the day-to-day activities within
Facilisgroup. I have enjoyed deepening my operational involvement
there and building close relationships with Partners, Preferred
Suppliers and the team. As a result, I am even more drawn to the
opportunities ahead for Facilisgroup and have plans to further
strengthen the team in 2024.
We remain firmly committed to
being a leader in the way we manage our businesses for the
long-term and continue to embed our ESG strategy across our Group.
In 2023, we have made good progress against a wide number of
topics. Our Chair focusses on some of those highlights in his
report and we will publish our third ESG report in March
2024.
Outlook
Trading in 2024 has started in line with
management expectations at both of our businesses. We are
concentrating on progressing our stated strategies.
Chris Lee
Chief Executive Officer
18 March 2024
CHIEF FINANCIAL OFFICER'S
REVIEW
Overview
FY 23 was a year for the Group
where progress in Facilisgroup was overshadowed by a contraction in
demand in the Technology and Consumer client sectors of Brand
Addition. Group revenue of £124.2m (FY 22: £134.0m) was 7% below FY
22 and Adjusted EBITDA of £16.0m (FY 22: £18.0m) was 11% below.
Operating profit was £8.0m (FY 22: £10.2m). The Group Board is
pleased to announce the continuation of the dividend policy
implemented in FY 22 and is proposing a final dividend of 1.2 pence
per share for FY 23 (FY 22: 0.6 pence per share), payable in
May 2024.
The Group's balance sheet remains
strong and its liquidity position continues to be robust with cash
balances of £10.0m at 18 March 2024 and no amounts drawn down on
the Company's £10m committed revolving credit facility.
£'m
|
FY
23
|
FY 22
|
Revenue
|
124.2
|
134.0
|
Gross profit
|
54.2
|
52.7
|
Gross profit margin
|
43.6%
|
39.3%
|
Adjusted EBITDA
|
16.0
|
18.0
|
Depreciation and
amortisation
|
(7.5)
|
(6.5)
|
Share-based payment
charge
|
(0.5)
|
(1.3)
|
Operating profit
|
8.0
|
10.2
|
Net finance costs
|
(0.6)
|
(0.5)
|
Profit before tax
|
7.4
|
9.7
|
Tax
|
(1.6)
|
(2.1)
|
Profit for the year
|
5.8
|
7.6
|
Weighted average number of
shares
|
167,412,949
|
167,450,893
|
Adjusted Basic EPS
|
4.60p
|
5.78p
|
Basic EPS
|
3.46p
|
4.55p
|
Revenue
Group revenue for FY 23 was
£124.2m (FY 22: £134.0m). Facilisgroup revenue was £17.9m (FY 22:
£16.6m). This represents an increase of 8% in GBP and 9% in
Facilisgroup's home currency of USD. ARR from Partner and customer
subscriptions for our technology accounted for this increase,
through a combination of additional fees from existing and new
Partners. Revenue in Brand Addition was £106.3m (FY 22: £117.4m).
The reduction in revenue was concentrated in our Technology and
Consumer clients which combined were £16.9m behind FY 22, offset in
part by £3.6m of revenue growth delivered by new client contracts
won in FY 22 and FY 23 and the robust performance of the more
traditional sectors of Transport and Engineering which grew by
£2.2m.
Gross profit
Gross profit as a percentage of
revenue increased during the year by 4.3 p.p.t to 43.6%. Of the
total increase, 2.9 p.p.t relates to the improvement in gross
margins at Brand Addition as the business raised prices to cover
the investment it has made to deliver increasingly complex services
to its clients. We expect this to be a permanent change moving the
businesses long-term gross margins to circa 33%. The balance of
improvement reflects the increasing proportion of Facilisgroup as
part of overall Group sales. This improvement is expected to
continue as Facilisgroup scales.
Adjusted EBITDA
Adjusted EBITDA for FY 23 was
£16.0m (FY 22: £18.0m). The reduction was made up as
follows:
-
|
Facilisgroup; £0.1m reduction as
incremental revenues were invested in sales and marketing to
continue to drive sales growth. The business has excellent EBITDA
returns of circa 50% demonstrating its ability to retain strong
margins whilst growing revenue;
|
-
|
Brand Addition; £2.0m reduction as
the volume reductions and investment in business services discussed
above translated to EBITDA; and
|
-
|
Central costs; £0.1m reduction in
costs in the year as incremental advisors' fees were offset by a
reduction in payroll costs as no bonuses were payable in respect of
FY 23.
|
Depreciation and
amortisation
The total charge in the year was
£7.5m (FY 22: £6.5m), of which £5.2m (FY 22: £4.2m) related to the
amortisation of intangible assets. In accordance with IAS 38, the
Group capitalises the costs incurred in the development of its
software and the increase in the year is primarily a result of the
Group's stated decision to increase capital expenditure in its
proprietary technology at Facilisgroup.
Share based payments
The total charge for the year
under IFRS 2 "Share-based payments" was £0.5m (FY 22: £1.3m). This
charge related to the 2020, 2021, 2022 and 2023 awards made under
the 2019 Long Term Incentive Plan and Save As You Earn scheme. The
reduction against FY 22 relates to the 2021 award for which the
performance period ended on 31 December 2023. As Group trading in
the year was below expectation, forecast performance conditions for
the EPS element of this award were not met giving rise to a
reduction in the charge associated with this award.
Operating profit
Operating profit for the year was
£8.0m (FY 22: £10.2m) after the impact of the reduction in sales
volumes and investment in new technology products and services
noted above and charging incremental depreciation and amortisation
of £1.0m
Finance costs
Net costs of £0.6m in the year (FY
22: £0.5m) include £0.4m interest costs on leases capitalised in
accordance with IFRS 16 (FY 22: £0.4m), £0.1m interest in relation
to the Group's £10.0m committed RCF facility (FY 22: £0.1m) and
£0.1m costs of refinancing this facility.
Taxation
The total taxation charge was
£1.6m (FY 22: £2.1m) giving rise to an effective rate of tax of
21.6% (FY 22: 21.6%). The effective rate of tax was lower than the
UK standard rate of taxation due to the proportion of profit earned
by the Group in overseas jurisdictions where the applicable rate of
corporation tax was lower than that in the UK. The Group is subject
to taxes in the UK, Ireland, Germany, Turkey, US, Canada, China and
Hong Kong.
Earnings per share
The earnings per share analysis in
note 6 covers both adjusted earnings per share (profit attributable
to equity shareholders before amortisation of acquired intangibles,
share-based payments charge and exceptional items divided by the
weighted average number of shares in issue during the year), and
basic earnings per share (profit attributable to equity holders
divided by the weighted average number of shares in issue during
the year). Adjusted earnings was £7.7m (FY 22: £9.7m), meaning
adjusted basic earnings per share was 4.60 pence per share (FY 22:
5.78 pence per share), a decrease of 1.18 pence per share. Basic
earnings per share was 3.46 pence per share (FY 22: 4.55 pence per
share), a decrease of 1.09 pence per share.
Dividends
In FY 23, the Group Board began
the implementation of a progressive dividend policy where it
announced its intention in the medium-term to move towards its
stated position at IPO of making dividend payments of c.30% of
profit after tax. For FY 23, the Board is proposing the payment of
a final dividend of 1.2 pence per share (FY 22: 0.6 pence per
share), a distribution totalling £2.0m, or 34% of profit after
tax. This will be paid on 7 May 2024, subject to shareholder
approval, to those shareholders on the register of members on 5
April 2024. The shares will trade ex-dividend on 4 April
2024.
Cash flow
The Group had a cash balance of
£15.9m at 31 December 2023 (FY 22: £15.1m).
Cash flow for the year is set out
below.
£'m
|
FY
23
|
FY 22
|
Adjusted EBITDA
|
16.0
|
18.0
|
Movement in working
capital
|
0.7
|
(3.4)
|
Capital expenditure
|
(8.6)
|
(7.4)
|
Deferred consideration
|
-
|
(1.0)
|
Leases
|
(1.6)
|
(1.7)
|
Operating cash flow
|
6.5
|
4.5
|
Tax paid
|
(2.5)
|
(1.7)
|
Net finance cash flows
|
(0.6)
|
(0.5)
|
Dividend paid
|
(1.0)
|
-
|
EBT purchase of own
shares
|
(0.4)
|
-
|
Exchange (loss)/gain
|
(1.2)
|
0.7
|
Net cash flow
|
0.8
|
3.0
|
Operating cash flow
Operating cash flow before tax
payments and net finance costs increased by £2.0m in the year to
£6.5m. This increase is due to the unwinding of working capital as
sales volumes in Brand Addition reduced. This remains an important
metric for the Group and is monitored to ensure underlying cash
flow remains sufficiently strong to underpin the short-term
additional investment required to deliver the Group's ambitious
plans for growth.
Balance sheet and shareholders'
funds
Net assets increased in the year
by £2.9m, the balance sheet is summarised below:
£'m
|
FY
23
|
FY 22
|
Non-current assets
|
69.9
|
69.8
|
Working capital
|
13.0
|
13.7
|
Cash
|
15.9
|
15.1
|
Lease liabilities
|
(7.6)
|
(9.1)
|
Other net liabilities
|
(2.7)
|
(3.9)
|
Net assets
|
88.5
|
85.6
|
Non-current assets
Non-current assets are the most
significant balance sheet category and comprise the
following:
£'m
|
FY
23
|
FY 22
|
Goodwill
|
36.0
|
36.1
|
Customer relationships
|
8.0
|
9.0
|
Software development
costs
|
17.3
|
14.9
|
Property, plant &
equipment
|
8.3
|
9.5
|
Deferred tax assets
|
0.3
|
0.3
|
Non-current assets
|
69.9
|
69.8
|
Amounts classified as goodwill and
customer relationships relate to historic acquisitions made by the
Group. Software development costs, which include £5.7m (FY 22:
£5.1m) investment in the year into Facilisgroup technology
products, arise from ongoing investment into Group proprietary
software and, in particular, investment into the Facilisgroup
digital commerce platform to ensure that existing technology
remains market leading and differentiated from our competitors,
alongside the development of new products that will support our
medium-term growth plans. The costs are capitalised in accordance
with IAS 38 and amortised over the period which the Group expects
to generate benefit from the development. As we have previously
indicated, FY 23 was the intended peak point of our investment into
the Facilisgroup platform and moving forward, we expect the level
of investment to reduce. Property, Plant and Equipment primarily
comprises the costs of Right-of-Use assets capitalised in
accordance with IFRS 16 "Leases".
Working capital
Working capital of £13.0m is £0.7m
lower than FY 22. This relates principally to the reduction in
sales in Brand Addition.
Lease liabilities
Lease liabilities of £7.6m (FY 22:
£9.1m) relate to Group properties capitalised in accordance with
IFRS 16. The reduction in the year reflects payments made under the
lease agreements.
Other net liabilities
Other net liabilities of £2.7m (FY
22: £3.9m) are net tax liabilities of which £2.4m (FY 22: £2.9m) is
deferred tax in respect of the intangible assets of Facilisgroup.
£1.5m of the deferred tax liability (FY 22: £1.7m) relates to
acquired customer relationships. These liabilities will reverse
over the period that the assets are amortised.
Alternative Performance Measures (APMs)
Throughout the Annual Report and
related statements, the Group has used a number of APMs as key
performance indicators in addition to those reported under IFRS.
These are used to provide additional clarity to the Group's
underlying financial performance and are used internally by
management to monitor business performance, in its budgeting and
forecasting and also for determination of Directors' and senior
management remuneration. These APMs are not defined under IFRS and,
therefore, may not be directly comparable with adjusted measures
presented by other companies. The non-GAAP measures are not
intended to be a substitute for, or superior to, any IFRS measures
of performance. However, they are considered by management to be
important measures used in the business for assessing performance.
They have been consistently applied in all years
presented.
The following are key non-GAAP
measures identified by the Group and used in the Business Review
and Financial Statements.
Adjusted EBITDA which means
operating profit before depreciation, amortisation, share-based
payments charge and exceptional items. Refer to note 7 for
reconciliation.
Adjusted operating profit which means operating profit before amortisation of acquired
intangible assets, share- based payments charge and exceptional
items. Refer to note 7 for reconciliation.
Adjusted operating profit less finance costs
which means adjusted operating profit before tax,
amortisation of acquired intangible assets, share-based payments
charge and exceptional items. Refer to note 7 for
reconciliation.
Adjusted earnings which means
profit attributable to equity shareholders before amortisation of
acquired intangible assets, share-based payments charge and
exceptional items. Refer to note 7 for reconciliation.
Adjusted earnings per share which means Adjusted earnings divided by a weighted average
number of shares in issue. Refer to note 6 for
reconciliation.
Claire Thomson
Chief Financial Officer
18 March 2024
Consolidated income statement
For the year ended 31 December 2023
|
Note
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Revenue
|
4
|
124,171
|
134,025
|
|
|
|
|
Cost of goods sold
|
|
(69,988)
|
(81,279)
|
Gross profit
|
|
54,183
|
52,746
|
|
|
|
|
Operating expenses
|
|
(46,185)
|
(42,523)
|
Operating profit
|
|
7,998
|
10,223
|
|
|
|
|
Analysed as:
|
|
|
|
Adjusted
EBITDA1
|
|
15,978
|
18,042
|
Depreciation
|
10
|
(2,248)
|
(2,384)
|
Amortisation
|
9
|
(5,184)
|
(4,182)
|
Share-based payment
charge
|
12
|
(548)
|
(1,253)
|
Total operating profit
|
|
7,998
|
10,223
|
|
|
|
|
Finance expense
|
|
(589)
|
(520)
|
Profit before taxation
|
|
7,409
|
9,703
|
|
|
|
|
Income tax expense
|
5
|
(1,614)
|
(2,090)
|
Profit for the year
|
|
5,795
|
7,613
|
|
|
|
|
Basic earnings per share
|
6
|
3.46p
|
4.55p
|
|
|
|
|
Diluted earnings per share
|
6
|
3.45p
|
4.54p
|
|
|
|
| |
Note 1: Adjusted EBITDA, which is defined as operating profit
before depreciation, amortisation, exceptional items and
share-based payment charge, is a non-GAAP metric used by management
and is not an IFRS disclosure.
All results derive from continuing
operations.
Consolidated statement of other comprehensive
income
For the year ended 31 December 2023
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Items that may be subsequently reclassified to profit and
loss
|
|
|
|
Foreign operations - foreign
currency translation differences
|
|
(2,068)
|
2,190
|
Other comprehensive (expense)/income for the
year
|
|
(2,068)
|
2,190
|
|
|
|
|
Profit for the year
|
|
5,795
|
7,613
|
Total comprehensive income for the year
|
|
3,727
|
9,803
|
Consolidated statement of financial
position
As at 31 December 2023
|
Note
|
2023
|
2022
|
|
|
£'000
|
£'000
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
9
|
61,307
|
60,002
|
Property, plant and
equipment
|
10
|
8,306
|
9,492
|
Deferred tax asset
|
|
282
|
292
|
Total non-current assets
|
|
69,895
|
69,786
|
|
|
|
|
Current assets
|
|
|
|
Inventories
|
|
11,852
|
15,447
|
Trade and other
receivables
|
|
30,158
|
34,693
|
Cash and cash
equivalents
|
|
15,898
|
15,058
|
Total current assets
|
|
57,908
|
65,198
|
|
|
|
|
TOTAL ASSETS
|
|
127,803
|
134,984
|
|
|
|
|
LIABILITIES
|
|
|
|
Non-current liabilities
|
|
|
|
Lease liability
|
11
|
6,130
|
7,490
|
Deferred tax liability
|
|
2,365
|
2,860
|
Total non-current liabilities
|
|
8,495
|
10,350
|
|
|
|
|
Current liabilities
|
|
|
|
Lease liability
|
11
|
1,494
|
1,569
|
Trade and other
payables
|
|
28,965
|
36,413
|
Current tax liability
|
|
381
|
1,063
|
Total current liabilities
|
|
30,840
|
39,045
|
|
|
|
|
TOTAL LIABILITIES
|
|
39,335
|
49,395
|
|
|
|
|
NET ASSETS
|
|
88,468
|
85,589
|
|
|
|
|
EQUITY AND RESERVES
|
|
|
|
Share capital
|
|
1,675
|
1,675
|
Share premium
|
|
78,451
|
78,451
|
Own share reserve
|
|
(227)
|
-
|
Capital reserve
|
|
125
|
125
|
Merger reserve
|
|
(103,581)
|
(103,581)
|
Translation reserve
|
|
(1,205)
|
863
|
Share-based payment
reserve
|
|
2,005
|
1,892
|
Retained earnings
|
|
111,225
|
106,164
|
TOTAL EQUITY AND RESERVES
|
|
88,468
|
85,589
|
Consolidated statement of changes in equity
For the year ended 31 December 2023
|
Share
capital
|
Share
premium
|
Own
share reserve
|
Capital
reserve
|
Merger
reserve
|
Translation reserve
|
Share-based payment reserve
|
Retained
earnings
|
Total
equity
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
1,675
|
78,451
|
-
|
125
|
(103,581)
|
(1,327)
|
681
|
98,551
|
74,575
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
7,613
|
7,613
|
Other comprehensive income for the
year
|
-
|
-
|
-
|
-
|
-
|
2,190
|
-
|
-
|
2,190
|
Total comprehensive income
|
-
|
-
|
-
|
-
|
-
|
2,190
|
-
|
7,613
|
9,803
|
Employee share schemes - value of
employee services (note 12)
|
-
|
-
|
-
|
-
|
-
|
-
|
1,196
|
-
|
1,196
|
Deferred tax on employee share
schemes
|
-
|
-
|
-
|
-
|
-
|
-
|
15
|
-
|
15
|
Total transactions with owners recognised in
equity
|
-
|
-
|
-
|
-
|
-
|
-
|
1,211
|
-
|
1,211
|
At 31 December 2022
|
1,675
|
78,451
|
-
|
125
|
(103,581)
|
863
|
1,892
|
106,164
|
85,589
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5,795
|
5,795
|
Other comprehensive expense for
the year
|
-
|
-
|
-
|
-
|
-
|
(2,068)
|
-
|
-
|
(2,068)
|
Total comprehensive (expense)/income
|
-
|
-
|
-
|
-
|
-
|
(2,068)
|
-
|
5,795
|
3,727
|
Dividend paid (note 8)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,005)
|
(1,005)
|
Purchase of own shares by
EBT
|
-
|
-
|
(395)
|
-
|
-
|
-
|
-
|
-
|
(395)
|
Employee share schemes - value of
employee services (note 12)
|
-
|
-
|
168
|
-
|
-
|
-
|
136
|
271
|
575
|
Deferred tax on employee share
schemes
|
-
|
-
|
-
|
-
|
-
|
-
|
(23)
|
-
|
(23)
|
Total transactions with owners recognised in
equity
|
|
-
|
(227)
|
-
|
-
|
-
|
113
|
(734)
|
(848)
|
At 31 December 2023
|
1,675
|
78,451
|
(227)
|
125
|
(103,581)
|
(1,205)
|
2,005
|
111,225
|
88,468
|
The Group set up an Employee
Benefit Trust (EBT) in the year to administer share plans and
acquire shares, using funds gifted by the Group, to meet
commitments to employee share schemes. At 31 December 2023, the EBT
held 412,637 shares (2022: nil).
Consolidated cash flow statement
For the year ended 31 December 2023
|
Note
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Profit before taxation
|
|
7,409
|
9,703
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation
|
10
|
2,248
|
2,384
|
Amortisation
|
9
|
5,184
|
4,182
|
Share-based payment
charge
|
12
|
548
|
1,253
|
(Profit)/loss on disposal of fixed
assets
|
|
(18)
|
19
|
Finance expense
|
|
589
|
520
|
Cash flows from operating activities before changes in
working capital
|
|
15,960
|
18,061
|
Change in inventories
|
|
3,595
|
(5,354)
|
Change in trade and other
receivables
|
|
4,535
|
(5,271)
|
Change in trade and other
payables
|
|
(7,422)
|
7,263
|
Cash flows from operating activities
|
|
16,668
|
14,699
|
|
|
|
|
Income taxes paid
|
|
(2,517)
|
(1,712)
|
Net cash flows from operating activities
|
|
14,151
|
12,987
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
10
|
(882)
|
(945)
|
Purchase of intangible
assets
|
9
|
(7,648)
|
(7,434)
|
Net cash flows used in investing activities
|
|
(8,530)
|
(8,379)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Lease payments
|
|
(1,600)
|
(1,737)
|
Interest paid
|
|
(589)
|
(520)
|
Dividends paid
|
8
|
(1,005)
|
-
|
Purchase of own shares by
EBT
|
|
(395)
|
-
|
Net cash flows used in financing activities
|
|
(3,589)
|
(2,257)
|
|
|
|
|
NET CASH FLOWS
|
|
2,032
|
2,351
|
|
|
|
|
Cash and cash equivalents at
beginning of year
|
|
15,058
|
12,051
|
Effect of exchange rate
fluctuations on cash held
|
|
(1,192)
|
656
|
Cash and cash equivalents at end of year
|
|
15,898
|
15,058
|
|
|
|
| |
Notes to the Group financial statements
1. GENERAL
INFORMATION
The principal activity of
The Pebble Group plc (the "Company") is that of a
holding company and the principal activity of the Company and its
subsidiaries (the "Group") is the sale of digital commerce,
products and related services to the promotional merchandise
industry. The Group has two segments: Brand Addition; and
Facilisgroup. For Brand Addition this is the sale of promotional
products internationally, to many of the world's best-known brands,
and for Facilisgroup the provision of digital commerce,
consolidated buying power, and community learning and networking
events to SME promotional product distributors in North America,
its Partners, through subscription-based services.
The Company was incorporated on 27
September 2019 in the United Kingdom and is a public company
limited by shares registered in England and Wales. The registered
office of the Company is Broadway House, Trafford Wharf Road,
Trafford Park, Manchester, England M17 1DD. The Company
registration number is 12231361.
2. ACCOUNTING
POLICIES
(a) Basis of preparation
The Group financial statements
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those standards.
The Company financial statements have been prepared under FRS 102.
Both financial statements have been prepared on the historical cost
basis with the exception of certain items which are measured at
fair value as disclosed in the principal accounting policies set
out below. These policies have been consistently applied to all
years presented unless otherwise stated.
The financial information is
presented in Sterling and has been rounded to the nearest thousand
(£'000).
(b) Going concern
The Group meets its day-to-day
working capital requirements through its own cash balances and
committed banking facilities. The Group refinanced its £10m RCF in
January 2023 for a three-year period to January 2026, with the
option to extend for an additional year to January 2027. In
assessing the appropriateness of adopting the going concern basis
in the preparation of these financial statements, the Directors
have prepared cash flow forecasts and projections for the two years
ending 31 December 2025.
The forecasts and projections,
which the Directors consider to be prudent, have been further
sensitised by applying reductions to revenue growth and margin, to
consider a severe but plausible downside. Under both the base and
sensitised case the Group is expected to have headroom against
covenants, which are based on interest cover and net leverage, and
a sufficient level of financial resources available through
existing facilities when the future funding requirements of the
Group are compared with the level of committed available
facilities. Based on this, the Directors are satisfied that the
Group has adequate resources to continue in operational existence
for at least 12 months from the date of signing the financial
statements. For this reason, they continue to adopt the going
concern basis in preparing the Group and Company financial
statements.
(c) Forward-looking
statements
Certain statements in this report
are forward looking with respect to the operations, strategy,
performance, financial condition, and growth opportunities of the
Group. The terms "expect", "anticipate", "should be", "will be",
"is likely to", and similar expressions, identify forward-looking
statements. Although the Board believes that the expectations
reflected in these forward-looking statements are reasonable, by
their nature these statements are based on assumptions and are
subject to a number of risks and uncertainties. Actual events could
differ materially from those expressed or implied by these
forward-looking statements. Factors which may cause future outcomes
to differ from those foreseen in forward-looking statements
include, without limitation: general economic conditions and
business conditions in the Group's markets, customers' expectations
and behaviours, supply chain developments, technology changes, the
actions of competitors, exchange rate fluctuations, and
legislative, fiscal and regulatory developments. Information
contained in these financial statements relating to the Group
should not be relied upon as a guide to future
performance.
(d) New standards, amendments and
interpretations
New and amended standards adopted by the
Group
The Group has applied the
following standards and amendments for the first time for its
annual reporting period commencing 1 January 2023:
· IFRS
17 Insurance Contracts;
· Amendment to IAS 12 Deferred tax: deferred tax related to
assets and liabilities arising from a single
transaction;
· Amendment to IAS 12 International tax reform - pillar two
model rules; and
· Narrow-scope amendments to IAS 1, Practice statement 2 and
IAS 8.
The amendments listed above do not
have any impact on the amounts recognised in prior periods and are
not expected to significantly affect current or future
periods.
New standards and interpretations not yet
adopted
Certain new accounting standards
and interpretations have been published that are not mandatory for
31 December 2023 reporting periods and have not been early adopted
by the Group. These standards are not expected to have a material
impact on the Group in the current or future reporting periods and
on foreseeable future transactions.
Judgements made by the Directors
in the application of these accounting policies that have a
significant effect on these financial statements together with
estimates with a significant risk of material adjustment in the
next year are discussed in note 3.
(e) Basis of consolidation
Subsidiaries are all entities over
which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group and are deconsolidated from the date control
ceases.
Inter-company transactions,
balances and unrealised gains and losses on transactions between
Group companies are eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Employee Benefit Trust (EBT)
The Group established an EBT (The
Pebble Group Employee Benefit Trust) on 2 May 2023 to enable shares
to be bought in the market to satisfy the demand from share awards
under the Group's employee share schemes. The EBT is a separately
administered trust and is funded by contributions from Group
companies in the form of a loan or a gift. The assets of the trust
comprise shares in The Pebble Group plc and cash balances. The
Group recognises the assets and liabilities of the trust in the
consolidated financial statements and shares held by the trust are
recorded in the own share reserve as a deduction from shareholders'
equity. As at 31 December 2023, the EBT held 412,637 shares in the
Company.
(f) Revenue
Revenue arises from the provision
of services through digital commerce and a global infrastructure
that enables the efficient sale and distribution of products to
support corporate marketing activity and consumer promotions of
businesses in Europe, North America and Asia.
To determine whether to recognise
revenue, the Group follows the 5-step process as set out within
IFRS 15:
1.
Identifying the contract with a customer
2.
Identifying the performance obligations
3.
Determining the transaction price
4.
Allocating the transaction price to the performance
obligations
5.
Recognising revenue when/as performance obligation(s) are
satisfied
Revenue is measured at transaction
price, stated net of VAT, rebates and other sales related
taxes.
Revenue is recognised either at a
point in time, or over-time as the Group satisfies performance
obligations by transferring the promised goods and services to its
customers as described below. Variable consideration, in the form
of rebates, is recognised at a point in time.
Facilisgroup provision of digital commerce, consolidated
buying power and community learning through subscription-based
services
Services are provided through
signed annual Partner agreements. There is one distinct performance
obligation, being the provision of access to the Facilisgroup
network. The transaction price is set on 1 January each year by
reference to the previous year sales volumes and is fixed for the
financial year. For new Partners, the transaction price is
calculated by reference to forecasted sales for the year the
Partner joins. Revenue is recognised over time on a monthly basis
as the Partners receive the benefits of being part of the network.
Payments are received on a monthly basis as the performance
obligations are satisfied over time.
Revenue earned from Preferred
Suppliers is recognised over time on a monthly basis in line with
orders placed by Partners with these suppliers. Payments are
received bi-annually.
Brand Addition sale of promotional product
Contracts with customers take the
form of customer orders under a framework agreement. There is one
distinct performance obligation, being the design, sourcing and
distribution of products to the customer, for which the transaction
price is clearly identified. Revenue is recognised at a point in
time when the Group satisfies performance obligations by
transferring the promised goods to its customers, i.e. when control
has passed from the Group to the customer. This tends to be on
receipt of the product by the customer.
Customer invoices tend to be
raised when the goods are delivered and the performance obligation
is satisfied. These invoices are shown within trade receivables and
payment is usually made within 60 days (being the common payment
terms). In cases where the goods have been delivered and an invoice
cannot be raised at that time, the income is accrued and presented
within trade receivables in the statement of financial position. A
small number of customers are invoiced in advance and these amounts
are deferred and presented within contract liabilities.
(g) Alternative performance
measures
Throughout the report, we refer to
a number of alternative performance measures (APMs). APMs are used
internally by management to assess the operating performance of the
Group. These are non-GAAP measures and so other entities may not
calculate these measures in the same way and hence are not directly
comparable. The APMs that are not recognised under UK-adopted
international accounting standards are:
· Adjusted earnings;
· Adjusted EBTIDA;
· Adjusted operating profit; and
· Adjusted operating profit less finance costs.
See note 7 for the reconciliation
of the APMs.
The Board considers that the above
APMs provide useful information for stakeholders on the underlying
trends and performance of the Group and facilitate meaningful year
on year comparisons.
(h) Taxation
Current tax is provided at amounts
expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised in
respect of all timing differences that have originated but not
reversed at the balance sheet date where events or transactions
that result in an obligation to pay more tax in the future, or a
right to pay less tax in future, have occurred at the balance sheet
date. Timing differences are differences between the Group's
taxable profits and its results as stated in the financial
statements that arise from the inclusion of gains and losses in tax
assessments in periods different from those in which they are
recognised in the financial statements. Deferred income tax assets
and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities
and when the deferred income taxes relate to the same fiscal
authority.
A net deferred tax asset is
regarded as recoverable, and therefore recognised only to the
extent that, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying
timing differences can be deducted.
Deferred tax is measured at the
average tax rates that are expected to apply in the periods in
which the timing differences are expected to reverse based on tax
rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax
is measured on a non-discounted basis.
Current and deferred tax is
recognised in profit or loss, except to the extent that it relates
to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.
(i) Intangible
assets
All business combinations are
accounted for by applying the purchase method. Goodwill represents
the difference between the cost of the acquisition and the fair
value of the net identifiable assets acquired. Identifiable
intangibles are those which can be sold separately, or which arise
from legal or contractual rights regardless of whether those rights
are separable and are initially recognised at fair value. In cases
where the vendors of an acquired business are required to remain
employed by the Group post-acquisition, the deferred payments are
treated as post-acquisition remuneration and charged to profit and
loss.
Goodwill is stated at cost less any
accumulated impairment losses. Goodwill is allocated to
cash-generating units and is not amortised but is tested annually
for impairment. Other intangibles are stated at cost less
accumulated amortisation and accumulated impairment
losses.
All intangible assets are
denominated in the functional currency of the relevant subsidiary
company and retranslated into Sterling at each period end date.
Exchange differences are dealt with through the consolidated
statement of other comprehensive income. Intangible assets are
presented in note 9.
Customer relationships
Customer relationships acquired in
a business combination are recognised at fair value at the date of
acquisition. Customer relationships have a finite life and are
subsequently carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to
allocate the cost of these assets over their estimated useful lives
of 20 years.
Development costs
Research costs are charged to the
income statement in the year in which they are incurred and are
presented within operating expenses. Internal development costs
that are incurred during the development of significant and
separately identifiable new technology are capitalised when the
following criteria are met:
· it is
technically feasible to complete the technological development so
that it will be available for use;
· management intends to complete the technological development
and use or sell it;
· it
can be demonstrated how the technological development will develop
probable future economic benefits;
· adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
· expenditure attributable to the technological product during
its development can be reliably measured.
Capitalised development costs
include costs of materials and direct labour costs. Internal costs
that are capitalised are limited to incremental costs specific to
the project.
Other development expenditures that
do not meet these criteria are recognised as an expense as incurred
and presented within operating expenses, together with any
amortisation which is charged to the income statement on a
straight-line basis over the estimated useful lives of development
intangible assets.
Assets classified as "work in
progress" are not amortised as such assets are not currently
available for (or in) use. Once available for use, assets will be
recategorised and amortised at the rate appropriate to their
classification.
Computer software
Computer software purchased
separately, that does not form an integral part of related
hardware, is capitalised at cost.
Amortisation is charged to profit
or loss on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite and is presented
within operating expenses. All intangible assets are amortised from
the date they are available for use. The estimated useful lives are
as follows:
· Customer relationships - 20 years; and
· Software and development costs - 3-5 years.
(j) Impairment
losses
The carrying amounts of the Group's
assets are tested for impairment. Assets with an indefinite useful
life are not depreciated or amortised but are tested for impairment
at each reporting date. Assets subject to amortisation/depreciation
and impairment losses are tested for impairment every time events
or circumstances indicate that they may be impaired.
Impairment losses are recognised in
the income statement based on the difference between the carrying
amount and the recoverable amount.
An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its
recoverable amount, which is the higher of fair value less costs of
disposal and value in use. To determine the value in use,
management estimates expected future cash flows and determines a
suitable discount rate in order to calculate the present value of
those cash flows. The data used for impairment testing procedures
are directly linked to the Group's latest approved budget, adjusted
as necessary to exclude the effects of future reorganisations and
asset enhancements. Discount factors are determined individually
for each asset and reflect current market assessments of the time
value of money and asset-specific risk.
The Group makes use of a simplified
approach in accounting for trade and other receivables and records
the loss allowance as lifetime expected credit losses. These are
the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses.
The Group assesses impairment of
trade receivables on a collective basis as they possess shared
credit risk characteristics; they have been grouped based on the
days past due.
(k) Foreign
currencies
Items included in the financial
statements are measured using the currency of the primary economic
environment in which the Group operates (the "functional
currency"). The functional and presentational currency is
Sterling.
The functional currency of a
subsidiary is determined based on specific primary and secondary
factors including the principal currency of the cash flows and the
primary economic environment in which the subsidiary operates. Once
determined, the functional currency is used and translated for
consolidation purposes.
Foreign currency items are
translated using the transaction date exchange rate. Monetary
assets and liabilities denominated in foreign currencies are
translated at the closing rate. Foreign currency differences are
taken to the income statement. Non-monetary assets and liabilities
that are measured based on historical cost in a foreign currency
are translated at the transaction date exchange rate.
The assets and liabilities of
foreign operations, including goodwill and fair value adjustments
arising on consolidation, are translated at closing rates. The
income and expenses of foreign operations are translated at the
average exchange rate of the year which approximates to the
transaction date exchange rates. Exchange differences arising on
consolidation are presented within other comprehensive
income.
(l) Tangible assets and
depreciation
Tangible fixed assets are stated
at historical purchase cost less accumulated depreciation. Cost
includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its
intended use.
Gains and losses on disposals are
determined by comparing proceeds with carrying amount. These are
included in profit or loss.
Depreciation is calculated using
straight-line method so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that
asset as follows:
· Fixtures and fittings - 3 - 15 years; and
· Computer hardware - 5 years.
(m) Leases
The Group applies IFRS 16 to
account for leases. At inception of a
contract, the Group assesses whether a contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of
time in exchange for consideration.
The Group recognises a right-of-use
asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which 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 restore the
underlying asset, less any lease incentives received. Extension and
termination options are included in a number of property and
equipment leases across the Group and so lease payments to be made
under reasonably certain extension options are also included in the
measurement of the liability.
The right-of-use asset is
subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liabilities.
The lease liability is initially
measured at the present value of lease payments that were not paid
at the commencement date, discounted using the Group's incremental
borrowing rate, which is based on the Group's financing facilities,
and adjusted where necessary for the specific terms of the
lease.
The lease liability is measured at
amortised cost using the effective interest method. If there is a
remeasurement of the lease liability, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is
recorded directly in profit or loss if the carrying amount of the
right-of-use asset is zero.
The Group presents right-of-use
assets within property, plant and equipment in note 10.
Short-term leases and low value assets
The Group has elected not to
recognise right-of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less, or leases of
low value assets. These lease payments are expensed on a
straight-line basis over the lease term.
(n) Segmental
reporting
The Group reports its business
activities in two areas being:
· Brand
Addition - sale of promotional product through services provided
under framework contracts on an international basis; and
· Facilisgroup - provision of digital commerce, consolidated
buying power and community learning and networking events to SME
promotional product distributors in North America through
subscription-based services.
This is reported in a manner consistent with the internal reporting
to the Executive Directors, who have been identified as the Chief
Operating Decision Maker.
(o) Employee
benefits
The Group provides a range of
benefits to employees, including annual bonus arrangements, paid
holiday arrangements and defined contribution pension
plans.
Short-term benefits
Short-term benefits, including
holiday pay and other similar non-monetary benefits, are recognised
as an expense in the period in which the service is
received.
Defined contribution pension plans
The Group operates a number of
country-specific defined contribution plans for its employees. A
defined contribution plan is a pension plan under which the Group
pays fixed contributions into a separate entity. Once the
contributions have been paid, the Group has no further payment
obligations. The contributions are recognised as an expense when
they are due. Amounts not paid are included in other payables
within trade and other payables in the statement of financial
position. The assets of the plans are held separately from the
Group in independently administered funds.
Share-based payments
Equity-settled awards are valued
at the grant date, and the fair value is charged as an expense in
the income statement spread over the vesting period. Fair value of
the awards are measured using an adjusted form of the Black-Scholes
model which includes a Monte Carlo simulation model. The fair value
of the options, appraised at the grant date, includes the impact of
market-based vesting conditions if applicable.
Share-based remuneration is
recognised as an expense in profit or loss with the credit side of
the entry being recorded in equity.
Non-market vesting conditions are
included in assumptions about the number of options that are
expected to become exercisable. Estimates are subsequently revised
if there is any indication that the number of share options
expected to vest differs from previous estimates. Any adjustment to
cumulative share-based compensation resulting from a revision is
recognised in the current period. The number of vested options
ultimately exercised by holders does not impact the expense
recorded in any period.
(p) Equity, reserves and
dividend payments
Share capital
Share capital represents the
nominal (par) value of shares that have been issued.
Share premium
Share premium represents the
difference between the nominal value of shares issued and the fair
value of consideration received. Any transaction costs associated
with the issuing of shares are deducted from share premium, net of
any related income tax benefits.
Own share reserve
Own share reserve represents
Ordinary Shares in the Company held by the Employee Benefit Trust
set up in 2023 to administer share plans and acquire shares, using
funds contributed by the Group, to meet commitments to employee
share schemes.
Capital reserve
The capital reserve was created in
2021 as a result of the purchase by the Company of all deferred
shares in issue.
Merger reserve
The merger reserve was created as a
result of the share for share exchange under which The Pebble Group
plc became the parent undertaking prior to the Initial Public
Offering (IPO). Under merger accounting principles, the assets and
liabilities of the subsidiaries were consolidated at book value in
the Group financial statements and the consolidated reserves of the
Group were adjusted to reflect the statutory share capital, share
premium and other reserves of the Company as if it had always
existed, with the difference presented as the merger
reserve.
Translation reserve
The translation reserve includes
foreign currency translation differences arising from the
translation of financial statements of the Group's foreign
entities.
Retained earnings
Retained earnings includes all
current and prior period retained profits and losses.
All transactions with owners of the
parent are recorded separately within equity.
Dividends
Dividends are recognised when
approved by the Group's shareholders or, in the case of interim
dividends, when the dividend has been paid. No interim dividend has
been paid in the year (2022: £nil). The Directors recommend the
payment of a final dividend for 2023 of 1.2 pence per share (2022:
0.6 pence per share).
3. JUDGEMENTS IN APPLYING ACCOUNTING
POLICIES AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the preparation of the Group
financial statements, the Directors, in applying the accounting
policies of the Group, make some judgements and estimates that
affect the reported amounts in the financial statements. The
following are the areas requiring the use of judgement and
estimates that may significantly impact the financial
statements:
(a) Accounting estimates
Information about estimates and
assumptions that may have the most significant effect on
recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially
different.
Goodwill impairment
The Group tests goodwill for
impairment every year in accordance with the relevant accounting
policies. The recoverable amounts of cash-generating units are
determined by calculating value in use. These calculations require
the use of estimates. As part of these calculations, we have
considered various sensitivities, explained in note 9. A 1%
increase in the Weighted Average Cost of Capital (WACC) would
reduce the total value in use by £21.5m (2022: £25.7m).
Goodwill relates to the various
acquisitions made and amounts to £35,964,000 as at 31 December 2023
(2022: £36,139,000). The estimates used in the impairment
calculation are set out in note 9. There is no significant risk of
material adjustment to the carrying amount of the goodwill within
the next 12 months. The sensitivities applied are explained in note
9.
Useful economic lives of intangible assets
The Directors have estimated the
useful economic lives of the acquired customer intangible assets to
be 20 years based upon attrition rates and the Directors'
judgement. These lives are reviewed and updated annually. There is
no significant risk of material adjustment to the carrying amount
of the intangible assets within the next 12 months. No reasonable
sensitivity performed in relation to the useful economic lives
assumption would result in a material change in the carrying value
of intangible assets.
Useful economic lives of property, plant and
equipment
Property, plant and equipment is
depreciated over the useful lives of the assets. Useful lives are
based on the management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness. The carrying values are tested for impairment when
there is an indication that the value of the assets might be
impaired. When carrying out impairment tests these would be based
upon future cash flow forecasts and these forecasts would be based
upon management judgement. Future events could cause the
assumptions to change, therefore, this could have an adverse effect
on the future results of the Group. There
is no significant risk of material adjustment to the carrying
amount of the property, plant and equipment within the next 12
months.
The useful economic lives applied
are set out in the accounting policies and are reviewed annually.
No reasonable sensitivity performed in relation to the useful
economic lives assumption would result in a material change in the
carrying value of property, plant and equipment.
Share-based payment charge
Fair values used in calculating
the amount to be expensed as a share-based payment is subject to a
level of uncertainty. These fair values are calculated by applying
a valuation model, which is in itself judgmental, and takes into
account certain inherently uncertain assumptions. The basic
assumptions that are used in the calculations are explained further
in note 12. No reasonable sensitivity performed in relation to the
share-based payment assumptions would result in a material change
to the expense in the consolidated income statement.
(b) Accounting judgements
The following are the areas
requiring the use of judgement that may significantly impact the
Group financial statements:
Capitalisation of internal development
costs
Distinguishing the research and
development phases of a new customised project and determining
whether the recognition requirements for the capitalisation of
development costs are met requires judgement. There is also some
judgement required in relation to the proportion of time
capitalised for employees working on the development of internally
generated intangible assets. After capitalisation, management
monitors whether the recognition requirements continue to be met
and at what point amortisation should commence, in addition to
whether there are any indicators that capitalised costs may be
impaired.
Capitalised development
expenditure is analysed further in note 9.
4. SEGMENTAL
ANALYSIS
The Chief Operating Decision Maker
(CODM) has been identified as the Executive Directors. The
Directors have determined that the operating segments, based on
these financial statements, are:
· Brand
Addition - sale of promotional product
through complex services provided under framework contracts on an
international basis;
· Facilisgroup - provision of digital commerce, consolidated
buying power and community learning and networking events to SME
promotional product distributors in North America through
subscription-based services; and
· Central operations - certain central activities and costs
that are not directly related to the activities of the operating
segments.
Segment information about the
above businesses is presented on the following pages.
The Executive Directors assess the
performance of the operating segments based on Adjusted EBITDA and
operating profit. Other information provided to the Directors is
measured in a manner consistent with that in the financial
statements. Inter-segment transactions are entered into under the
normal commercial terms and conditions that would also be available
to unrelated third parties. Segment assets exclude centrally held
cash at bank and in hand.
Major customers
In 2023, there was one major
customer that individually accounted for at least 10% of total
revenues (2022: none). In 2023, the revenue relating to this
customer was £12,511,000 and related to the Brand Addition
segment.
Analysis of revenue by geographical
destination
|
2023
|
2022
|
|
£'000
|
£'000
|
United Kingdom
|
21,710
|
22,570
|
Continental Europe
|
41,896
|
47,236
|
US
|
39,924
|
43,189
|
Rest of World
|
20,641
|
21,030
|
Total revenue
|
124,171
|
134,025
|
The geographical revenue
information above is based on the location of the
customer.
Included within Rest of World is
£14,378,000 of revenue from China (2022: £14,247,000).
All the above revenues are
generated from contracts with customers and are recognised at a
point in time or over time as follows:
|
2023
|
2022
|
|
£'000
|
£'000
|
At a point in time
|
107,128
|
118,507
|
Over time
|
17,043
|
15,518
|
Total revenue
|
124,171
|
134,025
|
All non-current assets of the
Group reside in the UK, with the exception of non-current assets
with a net book value of £31,525,000 (2022: £31,250,000) which were
located in North America and £2,006,000 (2022: £2,451,000) located
in other foreign countries.
Income statement for the year ended 31 December
2023
|
Brand
Addition
|
Facilisgroup
|
Central
operations
|
2023
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
106,276
|
17,895
|
-
|
124,171
|
Cost of goods sold
|
(69,988)
|
-
|
-
|
(69,988)
|
Gross profit
|
36,288
|
17,895
|
-
|
54,183
|
|
|
|
|
|
Operating expenses
|
(30,084)
|
(13,514)
|
(2,587)
|
(46,185)
|
Operating profit/(loss)
|
6,204
|
4,381
|
(2,587)
|
7,998
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
Adjusted EBITDA
|
9,491
|
8,851
|
(2,364)
|
15,978
|
Depreciation
|
(1,640)
|
(571)
|
(37)
|
(2,248)
|
Amortisation
|
(1,335)
|
(3,849)
|
-
|
(5,184)
|
Share-based payment
charge
|
(312)
|
(50)
|
(186)
|
(548)
|
Total operating profit/(loss)
|
6,204
|
4,381
|
(2,587)
|
7,998
|
|
|
|
|
|
Finance expense
|
(345)
|
(67)
|
(177)
|
(589)
|
Profit/(loss) before
taxation
|
5,859
|
4,314
|
(2,764)
|
7,409
|
|
|
|
|
|
Income tax expense
|
(891)
|
(700)
|
(23)
|
(1,614)
|
Profit/(loss) for the year
|
4,968
|
3,614
|
(2,787)
|
5,795
|
Statement of financial position as at 31 December
2023
|
Brand
Addition
|
Facilisgroup
|
Central
operations
|
2023
|
|
£'000
|
£'000
|
£'000
|
£'000
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
38,472
|
22,835
|
-
|
61,307
|
Property, plant and
equipment
|
5,269
|
2,803
|
234
|
8,306
|
Deferred tax asset
|
158
|
-
|
124
|
282
|
Total non-current assets
|
43,899
|
25,638
|
358
|
69,895
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
11,852
|
-
|
-
|
11,852
|
Trade and other
receivables
|
24,956
|
4,921
|
281
|
30,158
|
Cash and cash
equivalents
|
12,906
|
1,607
|
1,385
|
15,898
|
Total current assets
|
49,714
|
6,528
|
1,666
|
57,908
|
|
|
|
|
|
TOTAL ASSETS
|
93,613
|
32,166
|
2,024
|
127,803
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Lease liability
|
4,161
|
1,969
|
-
|
6,130
|
Deferred tax liability
|
-
|
2,365
|
-
|
2,365
|
Total non-current liabilities
|
4,161
|
4,334
|
-
|
8,495
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Lease liability
|
1,195
|
299
|
-
|
1,494
|
Trade and other
payables
|
26,519
|
2,006
|
440
|
28,965
|
Current tax
liability/(asset)
|
(202)
|
583
|
-
|
381
|
Total current liabilities
|
27,512
|
2,888
|
440
|
30,840
|
|
|
|
|
|
TOTAL LIABILITIES
|
31,673
|
7,222
|
440
|
39,335
|
|
|
|
|
|
NET ASSETS
|
61,940
|
24,944
|
1,584
|
88,468
|
Income statement for the year ended 31 December
2022
|
Brand
Addition
|
Facilisgroup
|
Central
operations
|
2022
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
117,391
|
16,634
|
-
|
134,025
|
Cost of goods sold
|
(81,279)
|
-
|
-
|
(81,279)
|
Gross profit
|
36,112
|
16,634
|
-
|
52,746
|
|
|
|
|
|
Operating expenses
|
(28,155)
|
(11,624)
|
(2,744)
|
(42,523)
|
Operating profit/(loss)
|
7,957
|
5,010
|
(2,744)
|
10,223
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
Adjusted EBITDA
|
11,467
|
9,011
|
(2,436)
|
18,042
|
Depreciation
|
(1,719)
|
(626)
|
(39)
|
(2,384)
|
Amortisation
|
(1,232)
|
(2,950)
|
-
|
(4,182)
|
Share-based payment
charge
|
(559)
|
(425)
|
(269)
|
(1,253)
|
Total operating profit/(loss)
|
7,957
|
5,010
|
(2,744)
|
10,223
|
|
|
|
|
|
Finance expense
|
(388)
|
(13)
|
(119)
|
(520)
|
Profit/(loss) before
taxation
|
7,569
|
4,997
|
(2,863)
|
9,703
|
|
|
|
|
|
Income tax
(expense)/income
|
(1,495)
|
(689)
|
94
|
(2,090)
|
Profit/(loss) for the year
|
6,074
|
4,308
|
(2,769)
|
7,613
|
Statement of financial position as at 31 December
2022
|
Brand
Addition
|
Facilisgroup
|
Central
operations
|
2022
|
|
£'000
|
£'000
|
£'000
|
£'000
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
37,863
|
22,139
|
-
|
60,002
|
Property, plant and
equipment
|
6,449
|
3,004
|
39
|
9,492
|
Deferred tax asset
|
137
|
-
|
155
|
292
|
Total non-current assets
|
44,449
|
25,143
|
194
|
69,786
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
15,447
|
-
|
-
|
15,447
|
Trade and other
receivables
|
29,989
|
4,648
|
56
|
34,693
|
Cash and cash
equivalents
|
12,655
|
2,265
|
138
|
15,058
|
Total current assets
|
58,091
|
6,913
|
194
|
65,198
|
|
|
|
|
|
TOTAL ASSETS
|
102,540
|
32,056
|
388
|
134,984
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Lease liability
|
5,148
|
2,315
|
27
|
7,490
|
Deferred tax liability
|
-
|
2,860
|
-
|
2,860
|
Total non-current liabilities
|
5,148
|
5,175
|
27
|
10,350
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Lease liability
|
1,221
|
303
|
45
|
1,569
|
Trade and other
payables
|
33,543
|
2,075
|
795
|
36,413
|
Current tax liability
|
258
|
805
|
-
|
1,063
|
Total current liabilities
|
35,022
|
3,183
|
840
|
39,045
|
|
|
|
|
|
TOTAL LIABILITIES
|
40,170
|
8,358
|
867
|
49,395
|
|
|
|
|
|
NET ASSETS/(LIABILITIES)
|
62,370
|
23,698
|
(479)
|
85,589
|
5. INCOME TAX
EXPENSE
|
2023
|
2022
|
|
£'000
|
£'000
|
Current income tax
|
|
|
- UK
corporation tax charge for the year
|
575
|
901
|
-
Adjustments in respect of prior years
|
(337)
|
(159)
|
-
Foreign tax
|
1,652
|
1,822
|
Total current income tax
|
1,890
|
2,564
|
Deferred tax
|
|
|
-
Deferred tax
|
(413)
|
(426)
|
-
Adjustments in respect of prior years
|
137
|
(48)
|
Total deferred tax
|
(276)
|
(474)
|
Total income tax expense
|
1,614
|
2,090
|
The expected corporation tax
charge for the year is calculated at the UK corporation tax rate of
23.5% (2022: 19%) on the profit before taxation for the year.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions in which the Group
operates.
The charge for the year can be
reconciled to the profit in the consolidated income statement as
follows:
Analysis of charge in year
|
2023
|
2022
|
|
£'000
|
£'000
|
Reconciliation of total tax charge:
|
|
|
Profit before taxation
|
7,409
|
9,703
|
Profit before taxation multiplied
by the rate of corporation tax in the UK of 23.5% (2022:
19%)
|
1,741
|
1,844
|
Effects of:
|
|
|
Adjustments in respect of prior
years
|
(200)
|
(207)
|
Impact of difference in current
and deferred tax rates in the UK
|
-
|
13
|
Non-deductible
(income)/expenses
|
(27)
|
32
|
Differences in tax rates in
overseas jurisdictions
|
100
|
286
|
Unrecognised for deferred
tax
|
-
|
122
|
Total income tax expense
|
1,614
|
2,090
|
Factors that may affect future tax charges
An increase in the UK corporation
tax rate from 19% to 25% from 1 April 2023. This change was
substantively enacted on 24 May 2021. The impact of this rate
change has been considered when recognising the deferred tax in
relation to the UK companies in the Group. Where the asset or
liability is expected to unwind after 1 April 2023, the deferred
tax has been recognised at 25%.
Amounts recognised directly in equity
Aggregate deferred tax arising in
the reporting period and not recognised in net profit or loss or
other comprehensive income but directly (charged)/credited to
equity:
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Deferred tax: (charge)/credit
relating to employee share schemes - value of employee
services
|
(23)
|
15
|
6. EARNINGS PER
SHARE
Basic earnings per share are
calculated by dividing the earnings attributable to equity
shareholders by the weighted average number of Ordinary Shares in
issue during the year.
For diluted earnings per share, the
weighted average number of Ordinary Shares in issue is adjusted to
assume conversion of all potentially dilutive Ordinary Shares. The
Company has potentially dilutive Ordinary Shares arising from share
options granted to employees. Options are dilutive under the Group
Sharesave Plan (SAYE) where the exercise price together with the
future IFRS 2 charge of the option is less than the average market
price of the Company's Ordinary Shares during the year. Options
under The Pebble Group plc Long Term Incentive Plan (LTIP), as
defined by IFRS 2, are contingently issuable shares and are
therefore only included within the calculation of diluted EPS if
the performance conditions, as set out in note 12, are satisfied at
the end of the reporting period, irrespective of whether this is
the end of the vesting period or not.
The impact of the potentially
dilutive share options issued under the LTIP on 21 December 2020, 8
June 2021, 29 March 2022, and 28 March 2023 and the SAYE on 6
October 2021 and 25 April 2023, as detailed in note 12, is 0.01p
for the year ended 31 December 2023 (2022: 0.01p).
The calculation of basic earnings
per share is based on the following data:
Statutory EPS
|
2023
|
2022
|
Earnings (£'000)
|
|
|
Earnings for the purposes of basic
and diluted earnings per share being
profit for the year attributable to
equity shareholders
|
5,795
|
7,613
|
Number of shares
|
|
|
Weighted average number of shares
for the purposes of basic earnings per share
|
167,412,949
|
167,450,893
|
Weighted average dilutive effects
of conditional share awards
|
445,904
|
185,624
|
Weighted average number of shares
for the purposes of diluted earnings per share
|
167,858,853
|
167,636,517
|
Earnings per Ordinary Share (pence)
|
|
|
Basic earnings per Ordinary Share
(pence)
|
3.46
|
4.55
|
Diluted earnings per Ordinary Share
(pence)
|
3.45
|
4.54
|
Adjusted EPS
The calculation of adjusted
earnings per share is based on the after-tax adjusted profit after
adding back certain costs as detailed in the table in note 7.
Adjusted earnings per share figures are given to exclude the
effects of amortisation of acquired intangible assets, share-based
payment charge and exceptional items, all net of taxation, and are
considered to show the underlying performance of the
Group.
|
2023
|
2022
|
|
Earnings (£'000)
|
|
|
|
Earnings for the purposes of basic
and diluted earnings per share being adjusted earnings
|
7,708
|
9,675
|
|
Number of shares
|
|
|
Weighted average number of shares
for the purposes of adjusted earnings per share
|
167,412,949
|
167,450,893
|
|
Weighted average dilutive effects
of conditional share awards
|
445,904
|
185,624
|
|
Weighted average number of shares
for the purposes of diluted earnings per share
|
167,858,853
|
167,636,517
|
|
Adjusted earnings per Ordinary Share (pence)
|
|
|
|
Basic adjusted earnings per
Ordinary Share (pence)
|
4.60
|
5.78
|
|
Diluted adjusted earnings per
Ordinary Share (pence)
|
4.59
|
5.77
|
|
|
|
|
|
| |
See note 7 for the reconciliation
of adjusted earnings.
7. ALTERNATIVE PERFORMANCE
MEASURES (APMs)
Throughout the consolidated financial statements, we refer to a number of
APMs. A reconciliation of the APMs used are shown below.
Adjusted earnings:
|
2023
|
2022
|
|
£'000
|
£'000
|
Profit for the year attributable to
equity shareholders
|
5,795
|
7,613
|
Add back/(deduct):
|
|
|
Amortisation charge on acquired
intangible assets
|
1,901
|
1,420
|
Share-based payment
charge
|
548
|
1,253
|
Tax effect of the above
|
(536)
|
(611)
|
Adjusted earnings
|
7,708
|
9,675
|
Adjusted EBITDA:
|
2023
|
2022
|
|
£'000
|
£'000
|
Operating profit
|
7,998
|
10,223
|
Add back:
|
|
|
Depreciation
|
2,248
|
2,384
|
Amortisation
|
5,184
|
4,182
|
Share-based payment
charge
|
548
|
1,253
|
Adjusted EBITDA
|
15,978
|
18,042
|
|
|
| |
Adjusted operating profit:
|
2023
|
2022
|
|
£'000
|
£'000
|
Operating profit
|
7,998
|
10,223
|
Add back:
|
|
|
Amortisation charge on acquired
intangible assets
|
1,901
|
1,420
|
Share-based payment
charge
|
548
|
1,253
|
Adjusted operating profit
|
10,447
|
12,896
|
Adjusted operating profit less finance
costs:
|
2023
|
2022
|
|
£'000
|
£'000
|
Adjusted operating
profit
|
10,447
|
12,896
|
Deduct:
|
|
|
Finance expense
|
(589)
|
(520)
|
Adjusted operating profit less finance
costs
|
9,858
|
12,376
|
8. DIVIDENDS PAID AND
PROPOSED
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Declared and paid during the year
|
|
|
Final dividend for 2022 paid in
June 2023: 0.6p per share
|
1,005
|
-
|
Proposed for approval at AGM (not recognised as a liability
at 31 December)
|
|
|
Final dividend for 2023: 1.2p per
share (2022: 0.6p per share)
|
2,004
|
1,005
|
As per the Trust
Deed, the EBT shall waive its entitlement to a dividend on the
shares held of 412,637 shares.
9. INTANGIBLE ASSETS
|
Goodwill
|
Customer
relationships
|
Software
and development costs
|
Work in
progress
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
|
Balance at 1 January 2022
|
35,805
|
10,241
|
21,321
|
423
|
67,790
|
|
Foreign exchange
translation
|
334
|
1,081
|
1,643
|
39
|
3,097
|
|
Additions
|
-
|
-
|
2,347
|
4,115
|
6,462
|
|
Disposals
|
-
|
-
|
(926)
|
-
|
(926)
|
|
Reclassifications
|
-
|
-
|
492
|
(492)
|
-
|
|
Balance at 31 December 2022
|
36,139
|
11,322
|
24,877
|
4,085
|
76,423
|
|
Foreign exchange
translation
|
(175)
|
(554)
|
(672)
|
(195)
|
(1,596)
|
|
Additions
|
-
|
-
|
661
|
6,987
|
7,648
|
|
Disposals
|
-
|
-
|
(186)
|
-
|
(186)
|
|
Reclassifications
|
-
|
-
|
4,200
|
(4,200)
|
-
|
|
Balance at 31 December 2023
|
35,964
|
10,768
|
28,880
|
6,677
|
82,289
|
|
|
|
|
|
|
|
|
Accumulated amortisation
|
|
|
|
|
|
|
Balance at 1 January 2022
|
-
|
1,647
|
10,469
|
-
|
12,116
|
|
Foreign exchange
translation
|
-
|
171
|
878
|
-
|
1,049
|
|
Charge for the
year
|
-
|
554
|
3,628
|
-
|
4,182
|
|
Disposals
|
-
|
-
|
(926)
|
-
|
(926)
|
|
Balance at 31 December 2022
|
-
|
2,372
|
14,049
|
-
|
16,421
|
|
Foreign exchange
translation
|
-
|
(123)
|
(345)
|
-
|
(468)
|
|
Charge for the
year
|
-
|
550
|
4,634
|
-
|
5,184
|
|
Disposals
|
-
|
-
|
(155)
|
-
|
(155)
|
|
Balance at 31 December 2023
|
-
|
2,799
|
18,183
|
-
|
20,982
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
Balance at 31 December
2021
|
35,805
|
8,594
|
10,852
|
423
|
55,674
|
|
Balance at 31 December
2022
|
36,139
|
8,950
|
10,828
|
4,085
|
60,002
|
|
Balance at 31 December 2023
|
35,964
|
7,969
|
10,697
|
6,677
|
61,307
|
|
|
|
|
|
| |
Staff costs of £6,626,000 (2022:
£5,797,000) have been capitalised as intangible assets. The net
book value of internally generated assets is £13,785,000 (2022:
£9,941,000).
The remaining amortisation periods
for customer relationships are between 13 and 15 years (2022: 14
and 16 years) and for software and development costs are between 1
and 5 years (2022: 1 and 5 years).
Goodwill has been tested for
impairment. The method, key assumptions and results of the
impairment review are detailed below.
Goodwill is attributed to the
respective cash-generating units (CGUs) within the Group (Brand
Addition and Facilisgroup). Goodwill has been tested for impairment
by assessing the value in use of each CGU. The value in use
calculations were based on projected cash flows in perpetuity. For
both CGUs, budgeted cash flows for 2024 to 2028 were used. For
Brand Addition, these were based on a forecast for 2024 with growth
rates of 6% applied to EBITDA each year. For Facilis, these were
based on forecasts for 2024 to 2025, with growth rates of 20%
applied to revenue each year and an EBITDA return of 50% for 2026
and 55% for 2027 and 2028. Subsequent years were based on a reduced
rate of growth of 2.0% (2022: 2.0%) into perpetuity. Appropriate
adjustments were also made for changes in working capital and other
cash flows to both CGUs.
These growth rates are based on
past experience and market conditions and discount rates are
consistent with external information. The growth rates shown are
the average applied to the cash flows of the individual CGUs and do
not form a basis for estimating the consolidated profits of the
Group in the future.
The Directors used an estimated
pre-tax market weighted average cost of capital (WACC) of 12.6% for
Brand Addition and 13.9% for Facilisgroup (2022: 12.4% for Brand
Addition and 13.6% for Facilisgroup) to discount the cash flows
used for the CGUs. Sensitivities to revenue and margin, consistent
with those used in the going concern analysis, were applied to each
CGU. Additionally, the impact on headroom arising from a 2%
increase in the WACC was also considered. The value in use
calculations described above, together with sensitivity analysis
using reasonably possible changes in the key assumptions as set out
above, indicate the Group has adequate headroom and therefore do
not give rise to impairment concerns.
Having completed the impairment
reviews at the date of transition and at each subsequent balance
sheet date, no impairments were identified.
Goodwill is attributable to the
following segments:
|
2023
|
2022
|
|
£'000
|
£'000
|
Brand Addition
|
33,057
|
33,057
|
Facilisgroup
|
2,907
|
3,082
|
|
35,964
|
36,139
|
The value in use, calculated as
described on the previous page and attributable to each CGU, is as
follows:
|
2023
|
2022
|
|
£'000
|
£'000
|
Brand Addition
|
102,824
|
102,824
|
Facilisgroup
|
98,560
|
123,798
|
|
201,384
|
226,622
|
The revenue and margin
sensitivities described above, result in a reduction in the total
value in use to £105,013,000. The WACC sensitivity described above,
results in a reduction in the total value in use to £162,373,000.
Under both sensitivities, there is headroom for both
CGUs.
Management considers that no
reasonably possible changes would reduce either CGUs headroom to
£nil. The reduction from prior year is driven by revenue growth
phasing for Facilis new products, in addition to the increase in
WACC.
10. PROPERTY, PLANT AND
EQUIPMENT
|
Fixtures
and fittings
|
Computer
hardware
|
Right-of-use assets
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
Balance at 1 January 2022
|
3,892
|
3,226
|
12,784
|
19,902
|
|
Foreign exchange
translation
|
216
|
146
|
783
|
1,145
|
|
Additions
|
327
|
618
|
2,471
|
3,416
|
|
Disposals
|
(880)
|
(1,319)
|
(2,240)
|
(4,439)
|
|
Balance at 31 December 2022
|
3,555
|
2,671
|
13,798
|
20,024
|
|
Foreign exchange
translation
|
(118)
|
(74)
|
(394)
|
(586)
|
|
Additions
|
245
|
626
|
516
|
1,387
|
|
Disposals
|
-
|
(350)
|
(477)
|
(827)
|
|
Balance at 31 December 2023
|
3,682
|
2,873
|
13,443
|
19,998
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
Balance at 1 January 2022
|
3,133
|
2,323
|
6,519
|
11,975
|
|
Foreign exchange
translation
|
154
|
98
|
339
|
591
|
|
Charge for the year
|
233
|
451
|
1,700
|
2,384
|
|
Disposals
|
(880)
|
(1,300)
|
(2,238)
|
(4,418)
|
|
Balance at 31 December 2022
|
2,640
|
1,572
|
6,320
|
10,532
|
|
Foreign exchange
translation
|
(81)
|
(48)
|
(143)
|
(272)
|
|
Charge for the year
|
278
|
465
|
1,505
|
2,248
|
|
Disposals
|
-
|
(345)
|
(471)
|
(816)
|
|
Balance at 31 December 2023
|
2,837
|
1,644
|
7,211
|
11,692
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
Balance at 31 December
2021
|
759
|
903
|
6,265
|
7,927
|
|
Balance at 31 December
2022
|
915
|
1,099
|
7,478
|
9,492
|
|
Balance at 31 December 2023
|
845
|
1,229
|
6,232
|
8,306
|
|
|
|
|
|
|
Right-of-use assets - net book value
|
|
|
|
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Leasehold property
|
5,943
|
7,362
|
Fixtures and fittings
|
100
|
87
|
Computer hardware
|
189
|
29
|
Total right-of-use assets - net book value
|
6,232
|
7,478
|
|
|
|
|
|
|
| |