REG - Pebble Group (The) - AUDITED FULL YEAR RESULTS 2024
18/03/2025 07:00
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RNS Number : 0193B Pebble Group PLC (The) 18 March 2025
18 March 2025
THE PEBBLE GROUP PLC
("The Pebble Group", the "Group" or the "Company")
AUDITED FULL YEAR RESULTS 2024
Performance in line with expectations, increasing cash conversion and
well-placed for growth
The Pebble Group, a leading provider of technology, products and related
services to the global promotional products industry, announces its audited
results for the year ended 31 December 2024 ("FY 24").
Commenting on the results, Chris Lee, Chief Executive Officer of The Pebble
Group said: "We are pleased to report that the Group's FY 24 results are in
line with expectations. Our operational focus in 2024 was on strengthening our
businesses to accelerate organic growth. At Facilisgroup, we spent a
significant amount of time engaging with stakeholders including Partners,
Preferred Suppliers, investors and our team. This engagement generated
valuable feedback and contributed to several important advancements in 2024,
which has helped position the business for future growth. At Brand Addition,
whilst improving our contract win count in late 2024, we have delivered growth
across all major financial metrics driven by gross margin improvement and
disciplined cost management.
"The cash generative qualities of the Group are strong and are expected to
continue to improve as the period of high, expansionary capex is completed. In
2025, we will allocate a portion of this improving cash conversion to support
accelerated organic revenue growth for 2026 and beyond. Notwithstanding the
possible effects that tariffs may have on the wider economy and on our
businesses, we remain confident in the Group's platform and proposition to
deliver long-term sustainable earnings growth and create shareholder value."
Financials
Statutory results FY 24 FY 23 Change
Revenue £125.3 £124.2m +0.9%
Gross profit margin 44.3% 43.6% +0.7ppt
Operating profit £8.6m £8.0m +7.5%
Profit before tax £8.1m £7.4m +9.5%
Basic earnings per share 3.83p 3.46p +10.7%
Cash £16.5m £15.9m +£0.6m
Dividend 1.85p 1.20p +54.2%
Other financial highlights FY 24 FY 23 Change
Adjusted EBITDA(1) £16.7m £16.0m +4.4%
Operating cash conversion(2) 68.2% 62.8% +5.4ppt
Basic adjusted earnings per share(3) 4.63p 4.60p +0.7%
Financial highlights
· Group revenue increased 1% to £125.3m (FY 23: £124.2m).
· Gross profit margin increased to 44.3% (FY 23: 43.6%).
· Group Adjusted EBITDA increased 4% to £16.7m (FY 23: £16.0m).
· Group operating profit increased 8% to £8.6m (FY 23: £8.0m).
· Strong balance sheet with cash of £16.5m at 31 December 2024, an increase of
£0.6m compared with 31 December 2023.
· Step-change reduction in capitalised development costs resulting in ongoing
improved operating cash conversion as the focus moves from new technology
development to sales and marketing.
· The Board is proposing to increase the dividend for FY 24 by 54% to 1.85 pence
per share (FY 23: 1.20 pence per share). The current £5.0m share buyback
programme is expected to continue, to date, £2.7m has been executed.
Business highlights
· Facilisgroup:
· Chief Product Officer appointed in April 2024, adding value through
focus on the refinement and delivery of our technology strategy.
· Chief Revenue Officer appointed in March 2025, to focus on
rejuvenating organic growth.
· FY 24 Gross Merchandise Value ("GMV") increased by 6% and spend
through our Preferred Suppliers increased by 8% demonstrating the quality of
the Facilisgroup community in an industry that grew by 1%.
· Step-change reduction in capitalised development costs into new
product during H2 2024 will have a full year benefit in 2025.
· Technology progress providing an opportunity to service the wider
addressable market for our leading end-to-end order processing system,
Syncore.
· Disciplined financial balance being sought between revenue growth,
EBITDA returns and capital expenditure with an intention to redeploy a portion
of the incremental cash flow in activities to accelerate organic revenue
growth.
· Brand Addition:
· Continuing to work with many of the best-known brands in the world
and maintaining excellent client retention rates.
· Revenues from our Consumer and Technology sector clients have
stabilised to predictable levels compared to 2023.
· FY 24 Gross margin of 35.2% (FY 23: 34.1%) shows consistent growth
over recent years as the value of services delivered to our clients resonates.
· Gross margin strength and disciplined cost management is supporting
EBITDA and operating profit growth.
· Several new contract wins in late 2024 and early 2025 are expected to
make an impact on revenues in FY 25.
Current Trading and Outlook
· Operating cash conversion increased in 2024 and is expected to continue to
improve.
· In 2025, the Group will allocate a portion of this improving cash conversion
to support new business momentum and accelerate organic revenue growth for
2026 and beyond.
· The Group will also continue to create shareholder value through the dividend
and maintain share buy backs whilst it remains value enhancing.
· At Facilisgroup, year to date:
o GMV of Partners is slightly ahead of the prior year; and
o Spend with our Preferred Suppliers is slightly behind the prior year.
· At Brand Addition, year to date:
o Sales orders are slightly ahead of the prior year; and
o New contract acquisition momentum has continued.
· The Board is closely monitoring the possible effects that tariffs may have on
the wider economy and on our businesses. However this evolves, we remain
confident in the Group's platform, proposition, and long-term prospects.
(1) Adjusted EBITDA means operating profit before depreciation, amortisation and
share-based payments charge/credit
(2) Operating cash conversion is defined as operating cash flow / Adjusted
operating profit
(3) Basic adjusted earnings per share ("EPS") represents Adjusted Earnings meaning
profit after tax before amortisation of acquired intangible assets,
share-based payments charge/credit and exceptional items net of taxation
divided by a weighted average number of shares
Presentation for Analysts and Investors
A presentation for analysts and investors with Q&A will take place at
8:00am today by webinar. Please register to attend via this link:
https://events.teams.microsoft.com/event/5e8961fd-e7c6-4a3b-b43e-b1f26660edc3@d78da0af-dec0-4c18-b3dc-54c78f21f08f
(https://events.teams.microsoft.com/event/5e8961fd-e7c6-4a3b-b43e-b1f26660edc3@d78da0af-dec0-4c18-b3dc-54c78f21f08f)
A copy of the presentation is available on the Investors section of The Pebble
Group's website at https://www.thepebblegroup.com/investors/
Presentation for retail investors
The management team is hosting a separate online presentation for retail
investors with Q&A on Wednesday 19 March 2025 at 4:15pm. To participate,
please register with Progressive here:
https://bit.ly/PEBB_FY24_results_webinar
(https://bit.ly/PEBB_FY24_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
Alistair de Kare-Silver
+44 (0) 207 183 1190
pebble@templebaradvisory.com (mailto:pebble@templebaradvisory.com)
Panmure Liberum (Nominated Adviser and Broker)
Edward Mansfield
William King
+44 (0) 20 3100 2000
About The Pebble Group
The Pebble Group is a provider of technology, 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 (http://www.thepebblegroup.com/) .
CHAIR'S REVIEW
Operational progress as we strengthen our platform to accelerate growth
Introduction
I am pleased to be making my first annual statement following my appointment
as Non-executive Chair in September 2024. I have spent my first few months
understanding the Group's strategic ambition, purpose and markets, and how it
develops and maintains its long-term relationships with its stakeholders.
The Group has established an excellent platform from which to grow and
capitalise on the exciting opportunities presented by the large, addressable
circa $50bn global market. The strengths of its two market leading businesses,
recurring revenues, differentiated technology, global footprint, and focus on
long-term relationships, provide the opportunity to take advantage of the
fragmented markets both businesses serve. This operational excellence,
combined with a strong balance sheet and highly cash generative
characteristics, means the Group is well positioned to create stakeholder
value.
I have met with many of our stakeholders and have experienced firsthand, their
dedication and enthusiasm about our businesses and their long-standing
relationships.
I am enjoying working with the Board to understand the Group's strengths,
enhance the value of our two businesses and execute on our strategy to unlock
future growth and shareholder value. I am excited by the sense of momentum and
strategic opportunities across the Group.
Performance
I am pleased to report that in 2024 the Group delivered a financial
performance in line with market expectations and made significant strategic
and operational progress to set the foundations to accelerate organic growth
and gain market share.
The Group achieved revenue in the year of £125.3m (FY 23: £124.2m) and
Adjusted EBITDA of £16.7m (FY 23: £16.0m). The Group's balance sheet remains
strong with net cash on 31 December 2024 of £16.5m, being an increase of
£0.6m from 31 December 2023. This increase is after a dividend payment of
£2.0m (FY 23: £1.0m) and the commencement of a share buyback programme, each
intended to return value to those shareholders that have supported the Group.
Our market and strategy
We operate in a large fragmented market which we estimate to be circa $50bn
annually. 50% of this opportunity is in North America, where our technology
business Facilisgroup is based, and Brand Addition has an established
footprint. The size of the industry is driven by the continued demand of
virtually all businesses to use product to make meaningful connections with
their stakeholders. Promotional products continue to be a key component in
marketing strategies, with the cost per impression or the return on investment
being highly attractive.
Transactions processed directly or indirectly by Facilisgroup and Brand
Addition, account for approximately 3% of all promotional products sold
globally and approximately 6% of all promotional product transactions in the
North American market. This gives the Group significant insight into market
trends and development and the Group is able to apply this knowledge to inform
its strategic planning.
Our market insights show 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 technology to support their efficiency and growth.
· Creative, sustainable promotional products continue to be a key
strategic component of the brand building, employee engagement and customer
reward strategies of businesses around the world.
The Group's strategic objectives are to capitalise on these opportunities
through its businesses, Facilisgroup and Brand Addition.
Share buyback programme and dividend
As part of the Group Board's commitment to creating shareholder value, during
the year, the Group commenced a share buyback programme in the Company's
Ordinary Shares up to a maximum consideration of £5.0m. At 17 March 2025,
5,439,931 shares have been bought back equating to 3.2% of the Company's share
capital, at a total cost of £2.7m. The Group Board intends that the share
buyback programme will continue.
The Group Board is proposing the payment of a final dividend of 1.85 pence per
share (FY 23: 1.2 pence per share), a distribution totalling £3.0m. This will
be paid on 13 June 2025, subject to shareholder approval.
Team and Board changes
I joined the Group as Chair in September 2024, following the departure of the
previous Chair in April 2024.
In the interim period, Chris Lee, became Interim Executive Chair alongside his
existing duties as Group CEO. Following my appointment, Chris ceased to act as
Interim Executive Chair and continues his role as CEO of the Group.
Environmental, Social and Governance (ESG)
We aim to integrate good governance and best practices into all aspects of our
business because we believe it is the right thing to do. We do this in our own
tone of voice, focussing on the things that matter most to our stakeholders.
In March 2025, we will publish our annual standalone ESG Report which provides
a comprehensive review of the meaningful action we are taking.
Outlook
I want to thank all the teams across the Group for their hard work and
dedication to our businesses during the past year.
Looking ahead, this is an exciting time for the Group. Our businesses are
strong with momentum building and are well positioned to take advantage of the
opportunities ahead.
I am confident that the Executive team and senior management across the Group
will focus on executing our strategy to enhance the value of our businesses
and capture the opportunities ahead enabling us to deliver profitable growth
and fulfil our vision of being the leading provider of technology, products
and related services to the global promotional products industry.
Anne de Kerckhove
Chair and Independent Non-executive Director
17 March 2025
CHIEF EXECUTIVE OFFICER'S REVIEW
Summary of Results
We are pleased to report that the Group's results for the year ended 31
December 2024 are in line with expectations.
Group revenue was £125.3m (FY 23: £124.2m), being slightly ahead of last
year.
Group Adjusted EBITDA was £16.7m (FY 23: £16.0m), an increase of 4% over
prior year.
The cash generative qualities of the Group remain strong and are expected to
continue to improve as our investment in capital expenditure is rebased. Net
cash was £16.5m at 31 December 2024 (31 December 2023: £15.9m) following a
dividend payment of £2.0m (FY 23: £1.0m) as well as £1.4m (FY 23: £nil)
applied to a share buyback programme.
Introduction, The Pebble Group: Building brands, growing relationships,
strengthening businesses
The Group's two businesses, Facilisgroup and Brand Addition, both occupy
market leading positions and have significant heritage in the fragmented
promotional products industry. The businesses also share enduring long-term
relationships with clients, Partners and suppliers which underpin the
recurring and repeatable revenues upon which the solid financial performance
and cash generation has been built.
Our expertise is centred on working with the best businesses throughout the
supply chain to deliver great products efficiently and safely into the market.
We do this through a combination of technology, best practice processes,
investment in our infrastructure and our highly experienced team. Our growth
starts with creating continual value for existing clients and Partners and
then attracting new long-term relationships.
With an estimated $50bn per annum spent globally on promotional products, the
market is large and offers attractive growth opportunities for Facilisgroup
and Brand Addition.
Business Review
Facilisgroup: providing an end-to-end order processing system, combined with a
proprietary operating method, market network and community support to growth
orientated promotional products distributors in North America
£m / $m FY 24 FY 23 FY 24 FY 23
ARR £16.9m £17.0m $21.6m $21.2m
Other revenue £0.7m £0.9m $0.9m $1.0m
Total revenue £17.6m £17.9m $22.5m $22.2m
Adjusted EBITDA £8.8m £8.9m $11.2m $11.0m
Operating profit £3.5m £4.4m $4.5m $5.4m
Reviewing our performance in USD, the business' home currency, FY 24 revenue
of $22.5m (FY 23: $22.2m) is slightly ahead of prior year. This reflects the
largely flat Gross Merchandise Value (GMV) of our existing Partners in 2023
which translates into 2024 technology subscriptions and 10 Partner businesses
being acquired in 2024, a higher number than previously experienced. In FY 24
the activities that underpinned revenue and influence the future annual
recurring revenue stream were:
· GMV: FY 24 $1.51bn (FY 23: $1.42bn). This is the sales activity of our
Partners (customers) through our technology platform, Syncore, and is an
increase of 6% on prior year. The growth was primarily driven by new Partner
acquisition and compares well to an overall growth in the North American
promotional products market of 1%;
· Preferred Supplier spend: FY 24 $0.51bn (FY 23: $0.47bn). An increase of 8%,
moving with the growth in GMV. Being ahead of the wider market demonstrates
the strength of the market network at Facilisgroup benefiting both our
Partners and Preferred Suppliers; and
· Partner numbers: 239 at 31 December 2024 (31 December 2023: 242). This
included 16 new quality Partner wins, 10 Partners acquired by other businesses
and a churn of 9, being a 96% underlying Partner retention rate.
A strength of Facilisgroup is its revenue to profit conversion. This continued
in 2024 with Adjusted EBITDA margins of 50% (FY 23: 50%). The value placed
upon this metric has been diluted as we have made material capital investment
into the business in recent years with the aim of expanding both our total
addressable market and the technology modules we offer. The amortisation
resulting from this investment is being accounted for through our financial
statements, with operating profit of $4.5m (FY 23: $5.4m).
In H2 2024 we were able to significantly reduce this investment as the
required period of high initial development came to an end on our expanding
addressable market product, Commercio Orders, and our eCommerce platform,
Commerico Stores. In the year, total capital expenditure at Facilisgroup was
$6.2m (FY 23: $7.7m) with a similar quantum of reduction expected in FY 25.
The result is that, in FY 24 operating cash conversion improved compared to
prior year and is expected to continue to improve in FY 25.
After three years of focussed investment, we believe our technology, processes
and network are industry leading, differentiated from our competitors and will
support our medium-term growth within this exciting market. We expect to move
from development to execution through our revenue generating teams, which has
started with our new strategic Chief Revenue Officer (CRO) hire.
Approach to the market
Providing an end-to-end order processing system, combined with a proprietary
operating method, market network and community support to growth orientated
promotional products businesses in North America, Facilisgroup has a proven
track record of being an integral part of the sustained growth of quality
promotional product distributors. Within two years of joining Facilisgroup new
Partners, on average, have grown their revenues by 14%. Collectively the
Partners, with FY 24 GMV of $1.5bn, represent circa 6% of the market, equating
to the largest consolidated spend in the industry.
Recognition of the quality of the Partners and Preferred Suppliers is
evidenced via inclusion of 15 Partners in the 2024 Top 100 businesses collated
by industry trade association PPAI and, 10 community members in the industry's
2024 Power 50, collated by ASI Central.
In 2024, I spent a significant amount of time engaging with Facilisgroup
stakeholders including Partners, Preferred Suppliers, investors and our team.
This engagement generated valuable feedback and supported several important
advancements in 2024. These include; the creation of a Partner Advisory
Committee; the appointment of a new leadership role of Chief Product Officer;
a step-change reduction in the capitalisation of internal product and
engineering time; a focussed Partner events schedule; improving the levels of
learning and experience of our team; the development of the product marketing
function; and, a rejuvenation of engagement in our community with Partners and
Preferred Suppliers. This was achieved through concentration on three key
themes; Technology, Team, and Community. In March 2025, this has been
augmented by the appointment of a new leadership role of CRO, completing the
leadership team capable of taking the business through its next stage of
growth.
From this improved foundation and an evolving strategy, we expect to move
forward in the journey to accelerated organic growth and a realisation of the
business' excellent operational and financial potential.
Our expertise is in providing an end-to-end order processing system, aligning
technology to proprietary operating methods, to growth orientated promotional
products distributors. This is supplemented by a powerful market network
supported by the industries most valued suppliers (Preferred Suppliers) and
the creation of a learning and collaboration community between the Partners,
Preferred Suppliers and Facilisgroup.
Under a single technology brand, Syncore, we will focus on maintaining our
excellent retention rates as the foundation of growth and aim to accelerate
net new Partner acquisitions, via;
· winning market share of distributors with similar profiles to our existing
Partners, through advancing technology, effective utilisation of the market
network with Preferred Suppliers, and the community created around this
offering;
· providing best-in-class integrations to support the increasingly complex needs
of larger high growth distributors, including existing Partners, who break
into the elite top 100 distributors in the industry; and
· extending the Partner pipeline with the next generation of winning promotional
products distributors through the unique combination of the technology
offering and use of the market network.
The above approach brings together the depth of the end-to-end order
processing capabilities of Syncore and the technology developed through
Commercio Orders.
Commercio Stores, our eCommerce platform, will continue to support existing
Partners and net new Partner acquisition opportunities through our integration
strategy with Syncore.
We have made positive operational progress in 2024. Our financial goal in 2025
is to manage a disciplined balance between revenue growth, EBITDA returns and
capital expenditure to best support the scaling of the business. With cash
returns improving year-on-year, we intend to invest a proportion of this into
activities to accelerate organic revenue growth which has started with the
appointment of the new leadership position of a CRO, focussed exclusively on
net new Partner acquisition.
Brand Addition: an end-to-end creative branded merchandise provider that helps global brands build culture, awareness and meaningful connections with their customers, employees and communities
£'m FY 24 FY 23
Revenue £107.7m £106.3m
Gross profit £37.9m £36.3m
Gross profit margin 35.2% 34.1%
Adjusted EBITDA £10.8m £9.5m
Operating profit £7.9m £6.2m
FY 24 revenue was £107.7m (FY 23: £106.3m) a slight year-on-year increase.
Existing clients contributed most of the revenue in FY 24. Revenues from our
Consumer and Technology sector clients have stabilised to predictable levels
compared to 2023.
As brand control, product efficacy and international consistency becomes even
more important to large global brands, Brand Addition has provided its clients
with additional services such as multi-country 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
in FY 24 to 35.2% (FY 23: 34.1%). This has evolved positively in recent years
from a previously guided average of 30%.
This gross margin accretion, alongside investment into our people and
processes has supported an increase in our FY 24 Adjusted EBITDA to £10.8m
(FY 23: £9.5m), being an increase of Adjusted EBITDA margin to 10.0% (FY 23:
8.9%). This progress in Adjusted EBITDA translated to improvement in Operating
profit to £7.9m (FY 23: £6.2m).
Key attributes of Brand Addition and the market in which it operates are:
· 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
· recent 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 as 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 awareness.
Our clients are many of the best-known brands in the world who trust Brand
Addition with their brand equity having built close, long-term relationships.
Our top 20 clients support circa 80% of our revenues and many are included
amongst the top brands in the world.
90% of the top 20 clients in 2019 still choose to be contracted with Brand
Addition in 2025. This demonstrates the high retention which underpins a
consistency of revenues and an ability to support organic growth.
Promotional products are outsourced under contract because brands wish to have
control over:
· thoughtful and creative bespoke products, aligned with their brand values, to
engage their stakeholders;
· product quality and supply chain assurance to protect their brand integrity;
and
· a consistent international strategy.
With these retention rates, the differentiated positioning of Brand Addition
and the size of the market, our aim of achieving annual organic growth rates
of +5% feels achievable. The new business impact into FY 24 revenue was less
than previous years due to a lower level of new contract wins in 2023 and
early 2024. Pleasingly, the appointment of a new Global Marketing Director in
early 2024 and the efforts of the new business teams across Brand Addition
proved much more successful in late 2024 with several new wins converted that
we expect to launch in 2025 and make an impact on revenues in FY 25.
Capital allocation
The Group's cash generation has been consistently strong since IPO in 2019,
with net cash at 31 December 2024 of £16.5m. Maintaining a debt free, strong
balance sheet, has supported the implementation of a progressive dividend
policy in 2023 and an ongoing £5.0m share buyback programme in 2024. As the
Group's total capital expenditure further reduces in 2025, our operating cash
conversion is expected to increase. Our priority is to execute on our organic
growth strategy and at Facilisgroup we intend to utilise an element of this
increasing operating cash conversion to accelerate organic revenue growth.
This still provides an ability to explore additional capital allocation
opportunities and the Board intends to seek shareholder feedback when
determining its priorities.
People and Environmental, Social and Governance (ESG)
I am grateful for the support of all the talented and dedicated people across
our Group in 2024. Much of my twenty-five years with the Group has been spent
alongside a team of quality people at Brand Addition, supporting them in its
growth and go-to-market evolution. The excellent long-term relationships with
many of the best brands in the world is testament to this team's abilities and
the business' depth of infrastructure. In 2024, I spent a large amount of time
with Facilisgroup and have benefited from direct involvement with its team and
stakeholders. In 2025, I will continue to bring this continuity to
Facilisgroup and seek to add revenue growth to the operational progress made
in 2024.
Our people are a consistent strength of the Group. My thanks go to everyone at
Facilisgroup, Brand Addition and The Pebble Group.
We remain firmly committed to being a leader in the way we manage our
businesses to good standards, for the long-term, which lends itself to many of
the principles under the banner of ESG. Our four ESG cornerstones have evolved
after multiple interactions with our stakeholders and represent the
fundamentals that are most important and relevant to our Group. In 2024, we
have made good progress against a wide number of topics, and we will publish
our fourth ESG report in March 2025.
Current Trading and Outlook
Operating cash conversion increased in 2024 and is expected to continue to
improve. For 2025, we have chosen to spend an element of this improving cash
conversion to support new business momentum and accelerate organic revenue
growth for 2026 and beyond. We will also continue to return value to
shareholders through the dividend and maintain share buybacks whilst it
remains value enhancing.
At Facilisgroup, year to date:
(i) GMV of Partners is slightly ahead of the prior year;
and
(ii) Spend with our Preferred Suppliers is slightly behind
the prior year.
At Brand Addition, year to date:
(i) Sales orders are slightly ahead of the prior year;
and
(ii) New contract acquisition momentum has continued.
The Board is closely monitoring the possible effects that tariffs may have on
the wider economy and on our businesses. However this evolves, we remain
confident in the Group's platform and proposition.
Chris Lee
Chief Executive Officer
17 March 2025
CHIEF FINANCIAL OFFICER'S REVIEW
Establishing our foundations for growth
Overview
FY 24 was a year in which the Group focussed on building out its platform to
accelerate growth. The Group delivered results in line with market
expectations, with revenue 1% ahead of FY 23. Gross margin increased further
following improvements made in 2023 and Adjusted EBITDA was £0.7m ahead of FY
23. This increase was achieved following strategic investments in our teams
that position both businesses to take advantage of the significant
opportunities ahead of them. These results, combined with the strong cash
generative characteristics of the Group and a step-change reduction in
capitalised development costs resulted in increased operating cash conversion
which is expected to continue into FY 25.
Group revenue of £125.3m (FY 23: £124.2m) was 1% ahead of FY 23 and Adjusted
EBITDA of £16.7m (FY 23: £16.0m) was 4% ahead. Operating profit was £8.6m
(FY 23: £8.0m), being 8% ahead of FY 23. The Board is pleased to propose the
payment of a final dividend of 1.84 pence per share for FY 24 (FY 23: 1.2
pence per share). This will be payable in June 2025 subject to final
shareholder approval.
The Group's balance sheet remains strong and its liquidity position continues
to be robust with cash balances of £11.2m at 17 March 2025 and no amounts
drawn down on the Company's £10m committed revolving credit facility.
£'m FY 24 FY 23
Revenue 125.3 124.2
Gross profit 55.5 54.2
Gross profit margin 44.3% 43.6%
Adjusted EBITDA 16.7 16.0
Depreciation and amortisation (8.6) (7.5)
Share-based payment credit/(charge) 0.5 (0.5)
Operating profit 8.6 8.0
Net finance costs (0.5) (0.6)
Profit before tax 8.1 7.4
Tax (1.7) (1.6)
Profit for the year 6.4 5.8
Weighted average number of shares 166,216,248 167,412,949
Adjusted Basic EPS 4.63p 4.60p
Basic EPS 3.83p 3.46p
Revenue
Group revenue for FY 24 was £125.3m (FY 23: £124.2m). Facilisgroup revenue
was £17.6m (FY 23: £17.9m), reflecting a 2% decline in GBP but a 1% increase
in Facilisgroup's home currency of USD. This slight increase in revenue was
incremental ARR from Partner subscriptions for our technology and fees from
our Preferred Suppliers. Revenue in Brand Addition was £107.7m (FY 23:
£106.3m) as revenue from our Consumer and Technology sector clients
stabilised to predictable levels compared with FY 23.
Gross profit
Following the improvements made in FY 23, gross profit as a percentage of
revenue increased further during FY 24 by 0.7 p.p.t to 44.3% as the value of
the complex services Brand Addition delivers to its clients continued to be
recognised and the increases from FY 23 were maintained.
Adjusted EBITDA
Adjusted EBITDA for FY 24 was £16.7m (FY 23: £16.0m). The increase was made
up as follows:
- Facilisgroup: £0.1m reduction as the slight increase in USD revenue was
offset by exchange rate movements in the GBP to USD exchange rate. The
business maintained its excellent EBITDA returns of circa 50% demonstrating
its ability to retain strong margins whilst investing to accelerate organic
growth;
- Brand Addition: £1.3m increase as the business delivered its third
consecutive year of improved gross profit margins which translated into
Adjusted EBITDA; and
- Central costs: £0.5m increase in costs in the year due to, a combination of
incremental advisers fees and payroll costs as FY 24 includes an accrual for
bonuses when none were payable in FY 23.
Depreciation and amortisation
The total charge in the year was £8.6m (FY 23: £7.5m), of which £6.3m (FY
23: £5.2m) related to the amortisation of intangible assets. The amortisation
of intangible assets charge in FY 24 includes a charge of £0.9m (FY 23:
£0.5m) to align the amortisation period for acquired intangible software
assets (previously five years) with that of those which are internally
generated (three years).
Share-based payments
The total credit for the year under IFRS 2 "Share-based payments" was £0.5m
(FY 23: charge of £0.5m) and relates to the 2022, 2023 and 2024 awards made
under The Pebble Group Long Term Incentive Plan (LTIP) and Sharesave Plan. The
credit reflects that no equity instruments are expected to vest under the
performance conditions of the 2022 LTIP award or the 2023 LTIP award. More
details of the performance conditions are provided in the Remuneration report.
Operating profit
Operating profit for the year was £8.6m (FY 23: £8.0m) reflecting the
increase in Adjusted EBITDA after charging incremental depreciation and
amortisation of £1.1m. This was offset by a corresponding credit of £1.0m in
relation to share-based payments as discussed above.
Finance costs
Net costs of £0.5m in the year (FY 23: £0.6m) include £0.4m interest costs
on leases capitalised in accordance with IFRS 16 (FY 23: £0.4m) and £0.1m
interest in relation to the Group's £10.0m committed RCF facility (FY 23:
£0.1m). There were no refinancing costs in FY 24 (FY 23: £0.1m).
Taxation
The total taxation charge was £1.7m (FY 23: £1.6m) giving rise to an
effective rate of tax of 21.0% (FY 23: 21.6%). The Group's effective rate of
tax was lower than the UK standard rate of 25% due to the relief it is
eligible to claim in the USA for qualifying research and development costs
incurred by Facilisgroup.
As a Group with worldwide operations, the Company is subject to several
factors that may affect future tax charges, principally the levels and mix of
profitability in different jurisdictions, transfer pricing regulations, tax
rates imposed and tax regime reforms. The Group is subject to income taxes in
the UK, Ireland, Germany, Turkey, USA, Canada, China and Hong Kong.
Earnings per share
The earnings per share analysis in note 10 covers both adjusted earnings per
share (profit attributable to equity shareholders before amortisation of
acquired intangibles, share-based payment charge/credit and exceptional items
net of taxation 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 were £7.7m (FY 23: £7.7m), meaning basic adjusted
earnings per share were 4.63 pence per share (FY 23: 4.60 pence per share), an
increase of 0.03 pence per share. Basic earnings per share was 3.83 pence per
share (FY 23: 3.46 pence per share), an increase of 0.37 pence per share.
Dividends
The Board is proposing the payment of a final dividend of 1.85 pence per share
(FY 23: 1.2 pence per share), a distribution totalling £3.0m. This will be
paid on 13 June 2025, subject to shareholder approval, to those shareholders
on the register of members on 16 May 2025. The shares will trade ex-dividend
on 15 May 2025.
Cash flow
The Group had a cash balance of £16.5m at 31 December 2024 (FY 23: £15.9m).
Cash flow for the year is set out below.
£'m FY 24 FY 23
Adjusted EBITDA 16.7 16.0
Movement in working capital (1.2) 0.7
Capital expenditure (6.8) (8.6)
Leases (1.7) (1.6)
Operating cash flow 7.0 6.5
Operating cash conversion % 68.2% 62.8%
Tax paid (2.7) (2.5)
Net finance cash flows (0.4) (0.6)
Dividend paid (2.0) (1.0)
EBT purchase of own shares (0.1) (0.4)
Acquisition of own shares (1.4) -
Exchange gain/(loss) 0.2 (1.2)
Net cash flow 0.6 0.8
Operating cash flow
Operating cash flow before tax payments and financing activities increased by
£0.5m in the year to £7.0m. This increase is net of a £1.2m investment in
working capital and a £1.8m reduction in capital expenditure as the Group has
made a step change in the level of investment in new product development at
Facilisgroup.
Operating cash conversion is an important metric for the Group. It's increase
in the year to 68.2% (FY 23: 62.8%) provides us with further options around
capital allocation.
Balance sheet and shareholders' funds
Net assets increased in the year by £2.9m, the balance sheet is summarised
below:
£'m FY 24 FY 23
Non-current assets 69.2 69.9
Working capital 14.2 13.0
Cash 16.5 15.9
Lease liabilities (6.9) (7.6)
Other net liabilities (1.6) (2.7)
Net assets 91.4 88.5
Non-current assets
Non-current assets are the most significant balance sheet category and
comprise the following:
£'m FY 24 FY 23
Goodwill 36.0 36.0
Customer relationships 7.6 8.0
Software development costs 18.2 17.3
Property, plant & equipment 7.1 8.3
Deferred tax assets 0.3 0.3
Non-current assets 69.2 69.9
Amounts classified as goodwill and customer relationships relate to historic
acquisitions made by the Group.
Software development costs, which include £4.9m (FY 23: £5.7m) investment in
the year into Facilisgroup technology products, arise from:
i) ongoing investment into Group proprietary software
and, in particular, investment into the Facilisgroup technology platform to
ensure that existing technology remains market leading and differentiated from
our competitors; and
ii) new product development that will support our
medium-term growth plans.
The costs are capitalised in accordance with IAS 38 and, once the product is
released to market, amortised over the period, the Group expects to benefit
from its development. The amortisation period is typically three years. During
H2 2024 there was a reduction of $1.5m in the level of our investment into new
product development at Facilisgroup. We expect a similar quantum of reduction
in FY 25.
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 £14.1m is £1.2m higher than FY 23 of which £0.7m was the
timing of Facilisgroup Community events.
Lease liabilities
Lease liabilities of £6.9m (FY 23: £7.6m) 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 £1.6m (FY 23: £2.7m) are net tax liabilities of
which £1.6m (FY 23: £2.4m) is deferred tax. £1.4m of the deferred tax
liability (FY 23: £1.5m) 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 Financial Statements.
Adjusted EBITDA which means operating profit before depreciation,
amortisation, share-based payment credit/(charge) and exceptional items. Refer
to note 11 for reconciliation.
Adjusted operating profit which means operating profit before amortisation of
acquired intangible assets, share- based payment credit/(charge) and
exceptional items. Refer to note 11 for reconciliation.
Adjusted profit before tax which means profit before tax, amortisation of
acquired intangible assets, share-based payment credit/(charge) and
exceptional items. Refer to note 11 for reconciliation.
Adjusted earnings which means profit after tax before amortisation of acquired
intangible assets, share-based payment credit/(charge) and exceptional items
net of taxation. Refer to note 11 for reconciliation.
Adjusted earnings per share which means Adjusted earnings divided by a
weighted average number of shares in issue. Refer to note 10 for
reconciliation.
Claire Thomson
Chief Financial Officer
17 March 2025
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2024
2024 2023
Note £'000 £'000
Revenue 4 125,268 124,171
Cost of goods sold (69,816) (69,988)
Gross profit 55,452 54,183
Operating expenses 5 (46,829) (46,185)
Operating profit 8,623 7,998
Analysed as:
Adjusted EBITDA(1) 16,687 15,978
Depreciation 10 (2,206) (2,248)
Amortisation 9 (6,316) (5,184)
Share-based payment credit/(charge) 12 458 (548)
Operating profit 8,623 7,998
Finance expense (545) (589)
Profit before taxation 8,078 7,409
Income tax expense 5 (1,712) (1,614)
Profit for the year 6,366 5,795
Basic earnings per share 6 3.83p 3.46p
Diluted earnings per share 6 3.82p 3.45p
Note 1 Adjusted EBITDA, which is defined as operating profit before
depreciation, amortisation and share-based payment credit/(charge), is a
non-GAAP metric used by management and is not an IFRS disclosure.
All results derive from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
2024 2023
£'000 £'000
Profit for the year 6,366 5,795
Items that may be subsequently reclassified to profit and loss
Exchange differences on translation of foreign operations 504 (2,068)
Other comprehensive income/(expense) for the year 504 (2,068)
Total comprehensive income for the year 6,870 3,727
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2024 2024 2023
Note £'000 £'000
Assets
Non-current assets
Intangible assets 9 61,758 61,307
Property, plant and equipment 10 7,123 8,306
Deferred tax asset 285 282
Total non-current assets 69,166 69,895
Current assets
Inventories 12,095 11,852
Trade and other receivables 30,651 30,158
Cash and cash equivalents 16,459 15,898
Current tax asset 49 -
Total current assets 59,254 57,908
Total assets 128,420 127,803
Liabilities
Non-current liabilities
Lease liability 21 5,185 6,130
Deferred tax liability 1,645 2,365
Total non-current liabilities 6,830 8,495
Current liabilities
Lease liability 11 1,652 1,494
Trade and other payables 28,562 28,965
Current tax liability - 381
Total current liabilities 30,214 30,840
Total liabilities 37,044 39,335
Net assets 91,376 88,468
Equity
Share capital 12 1,648 1,675
Share premium 12 78,451 78,451
Own share reserve (251) (227)
Capital reserve 152 125
Merger reserve (103,581) (103,581)
Translation reserve (701) (1,205)
Share-based payment reserve 1,442 2,005
Retained earnings 114,216 111,225
Total equity 91,376 88,468
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Share capital Share premium Own share reserve Share-based payment reserve Retained earnings Total equity
Capital reserve Merger reserve Translation reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 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 13) - - 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
Profit for the year - - - - - - - 6,366 6,366
Other comprehensive income for the year - - - - - 504 - - 504
Total comprehensive income - - - - - 504 - 6,366 6,870
Dividend paid (note 8) - - - - - - - (2,005) (2,005)
Purchase of own shares (note 12) (27) - - 27 - - - (1,416) (1,416)
Purchase of own shares by EBT (note 12) - - (109) - - - - - (109)
Employee share schemes - value of employee services (note 13) - - 85 - - - (563) 46 (432)
Deferred tax on employee share schemes - - - - - - - - -
Total transactions with owners recognised in equity (27) - (24) 27 - - (563) (3,375) (3,962)
At 31 December 2024 1,648 78,451 (251) 152 (103,581) (701) 1,442 114,216 91,376
The Group has an Employee Benefit Trust (EBT) to administer share plans and to
acquire shares, using funds contributed by the Group, to meet commitments to
employee share schemes. At 31 December 2024, the EBT held 453,187 shares
(2023: 412,637).
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2024
2024 2023
Note £'000 £'000
Profit before taxation 8,078 7,409
Adjustments for:
Depreciation 10 2,206 2,248
Amortisation 9 6,316 5,184
Share-based payment (credit)/charge 13 (458) 548
Profit on disposal of fixed assets - (18)
Finance expense 545 589
Cash flows from operating activities before changes in working capital 16,687 15,960
Change in inventories (285) 3,595
Change in trade and other receivables (635) 4,535
Change in trade and other payables (293) (7,422)
Cash flows from operating activities 15,474 16,668
Income taxes paid (2,655) (2,517)
Net cash flows from operating activities 12,819 14,151
Cash flows from investing activities
Purchase of property, plant and equipment 10 (203) (882)
Purchase of intangible assets 9 (6,559) (7,648)
Net cash flows used in investing activities (6,762) (8,530)
Cash flows from financing activities
Lease payments - capital (1,702) (1,600)
Lease payments - interest (357) (399)
Interest paid (86) (190)
Dividends paid 8 (2,005) (1,005)
Share-based payments - cash-settled (7) -
Purchase of own shares 12 (1,416) -
Purchase of own shares by EBT 12 (109) (395)
Net cash flows used in financing activities (5,682) (3,589)
Net cash flows 375 2,032
Cash and cash equivalents at beginning of year 15,898 15,058
Effects of exchange rate changes 186 (1,192)
Cash and cash equivalents at end of year 16,459 15,898
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 technology solutions, 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. For Facilisgroup, this is the provision of digital technology,
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.
Forward-looking statements
Certain statements in this Annual 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.
Alternative performance measures
Throughout the Annual 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 EBITDA;
· Adjusted operating profit;
· Adjusted profit before tax;
· Adjusted earnings; and
· Adjusted earnings per share (EPS) (note 6).
A reconciliation of the APMs can be found in note 7.
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.
2. ACCOUNTING POLICIES
(a) Audited preliminary or annual results announcements
The financial information for the year ended 31 December 2024 and the year
ended 31 December 2023 does not constitute the company's statutory accounts
for those years.
Statutory accounts for the year ended 31 December 2023 have been delivered to
the Registrar of Companies. The statutory accounts for the year ended 31
December 2024 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
The auditors' report issued by BDO LLP on the accounts for the year ended 31
December 2024 and auditors' report issued by PricewaterhouseCoopers LLP for
the year ended 31 December 2023 were unqualified, did not draw attention to
any matters by way of emphasis, and did not contain a statement under 498(2)
or 498(3) of the Companies Act 2006.
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
revolving credit facility in February 2025 for a four-year period to February
2029. 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 up to 31 December 2026. The Directors have
considered the principal risks and uncertainties with respect to their
assessment, none of which in the opinion of the Directors give rise to
specific risk to the going concern basis of the operating segments or Group.
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. In addition, the Directors have prepared a severe
downside scenario to determine the level of revenue decline required for the
Group to no longer be considered a going concern. The analysis demonstrates
that revenue would need to fall by 27% from forecast levels with no remedial
action for this to occur. Even in this extreme scenario, the Group would
retain sufficient liquidity to meet its obligations and continue operations
beyond 31 December 2026.
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) 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 2024:
· Supplier Finance Arrangements (Amendments to IAS 7);
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);
· Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1); and
· Non-current Liabilities with Covenants (Amendments to IAS 1).
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
Standards and interpretations have been published that are not mandatory for
31 December 2024 reporting periods and have not been early adopted by the
Group:
· Lack of Exchangeability (Amendments to IAS 21);
· Amendments to the Classification and Measurement of Financial
Instruments (Amendments to IFRS 9 and IFRS 7);
· IFRS 18 Presentation and Disclosure in Financial Statements
issued; and
· IFRS 19 Subsidiaries without Public Accountability: Disclosures.
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.
(d) Basis of consolidation
Subsidiaries are defined as 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.
(e) Revenue
Revenue arises from the provision of services through digital technology 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, refunds, customer
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 customer rebates, is recognised at a point in time.
Facilisgroup provision of digital technology, 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 products
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 despatched 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
other 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.
(f) 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 assets and liabilities are recognised where the carrying amount
of an asset or liability in the consolidated statement of financial position
differs from its tax base, except for differences arising on: the initial
recognition of goodwill; the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of the
transaction affects neither accounting or taxable profit, and investments in
subsidiaries and joint arrangements where the Group is able to control the
timing of the reversal of the difference and it is probable that the
difference will not reverse in the foreseeable future.
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 differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply
in the periods in which the 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.
(g) 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.
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.
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 use at the year end. 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.
(h) 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.
(i) Foreign currencies
Items included in the financial statements are measured using the currency of
the primary economic environment in which the parent company 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.
(j) Property, plant and equipment and depreciation
Property, plant and equipment 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.
(k) 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. Any expense for short-term and low
value leases is not material and has not been presented.
(l) Segmental reporting
The Group reports its business activities in two areas being:
· Brand Addition - sale of promotional products through services
provided under framework contracts on an international basis; and
· Facilisgroup - provision of digital technology, 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.
(m) 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/credit in profit or loss
with the credit/debit 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.
(n) 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. When share capital recognised as equity is repurchased by the Group,
the amount of the consideration paid, which includes directly attributable
costs, is recognised as a deduction from equity. Repurchased shares are
subsequently cancelled and classified as a deduction in Share capital with a
corresponding increase in Capital reserve.
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 (2023: £nil). The Directors recommend the
payment of a final dividend for 2024 of 1.85 pence per share (2023: 1.2 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.
Goodwill relates to the various acquisitions made and amounts to £36,015,000
as at 31 December 2024 (2023: £35,964,000). The estimates used in the
impairment calculation are set out in note 13. 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.
During the year, the Directors made the decision to align the useful lives of
certain acquired intangible assets with those that are internally generated.
The impact of this change is explained in note 9.
Share-based payment charge/credit
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 judgemental, and takes into
account certain inherently uncertain assumptions. The basic assumptions that
are used in the calculations are explained further in note 13. No reasonable
sensitivity performed in relation to the share-based payment assumptions would
result in a material change to the charge/credit 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.
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 products through complex
services provided under framework contracts on an international basis;
· Facilisgroup - provision of technology solutions, 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 2024, there was one major customer that individually accounted for at least
10% of total revenues (2023: one). In 2024, the revenue relating to this
customer was £13,787,000 (2023: £12,511,000) and related to the Brand
Addition segment.
Analysis of revenue by geographical destination
2024 2023
£'000 £'000
United Kingdom 18,193 21,710
Continental Europe 41,944 41,896
North America 42,713 39,924
Rest of World 22,418 20,641
Total revenue 125,268 124,171
The geographical revenue information above is based on the location of the
customer.
Included within Rest of World is £18,250,000 of revenue from China (2023:
£14,378,000) and included within Continental Europe is £9,695,000 of revenue
from Germany (2023: £8,917,000). No other individual countries represented
more than 5% of total revenues and therefore are not considered by management
to be individually material.
All £17,595,000 of revenue related to the Facilisgroup segment is included
within North America (2023: £17,895,000).
All the above revenues are generated from contracts with customers and are
recognised at a point in time or over time as follows:
2024 2023
£'000 £'000
At a point in time 108,407 107,128
Over time 16,861 17,043
Total revenue 125,268 124,171
All £107,673,000 of revenue related to the Brand Addition segment is
recognised at a point in time (2023: £106,276,000).
All non-current assets of the Group reside in the UK, with the exception of
non-current assets with a net book value of £31,248,000 (2023: £31,525,000)
which were located in North America and £2,091,000 (2023: £2,006,000)
located in other foreign countries.
Income statement for the year ended 31 December 2024
Brand Facilisgroup Central Total
Addition
operations
Group
£'000 £'000 £'000 £'000
Revenue 107,673 17,595 - 125,268
Cost of goods sold (69,816) - - (69,816)
Gross profit 37,857 17,595 - 55,452
Operating expenses (29,979) (14,125) (2,725) (46,829)
Operating profit/(loss) 7,878 3,470 (2,725) 8,623
Analysed as:
Adjusted EBITDA 10,771 8,760 (2,844) 16,687
Depreciation (1,612) (552) (42) (2,206)
Amortisation (1,499) (4,817) - (6,316)
Share-based payment credit 218 79 161 458
Operating profit/(loss) 7,878 3,470 (2,725) 8,623
Finance expense (292) (60) (193) (545)
Profit/(loss) before taxation 7,586 3,410 (2,918) 8,078
Income tax expense (1,094) (597) (21) (1,712)
Profit/(loss) for the year 6,492 2,813 (2,939) 6,366
Statement of financial position as at 31 December 2024
Brand Facilisgroup Central operations Total
Addition
Group
£'000 £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 38,593 23,165 - 61,758
Property, plant and equipment 4,522 2,373 228 7,123
Deferred tax asset 187 - 98 285
Total non-current assets 43,302 25,538 326 69,166
Current assets
Inventories 12,095 - - 12,095
Trade and other receivables 24,649 5,726 276 30,651
Cash and cash equivalents 11,435 1,207 3,817 16,459
Current tax asset 10 39 - 49
Total current assets 48,189 6,972 4,093 59,254
Total assets 91,491 32,510 4,419 128,420
Liabilities
Non-current liabilities
Lease liability 3,269 1,788 128 5,185
Deferred tax liability - 1,645 - 1,645
Total non-current liabilities 3,269 3,433 128 6,830
Current liabilities
Lease liability 1,311 292 49 1,652
Trade and other payables 25,935 1,954 673 28,562
Total current liabilities 27,246 2,246 722 30,214
Total liabilities 30,515 5,679 850 37,044
Net assets 60,976 26,831 3,569 91,376
Income statement for the year ended 31 December 2023
Brand Facilisgroup Central Total
Addition
operations
Group
£'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)
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 Facilisgroup Central Total
Addition
operations
Group
£'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
5. INCOME TAX EXPENSE
2024 2023
£'000 £'000
Current income tax
- UK corporation tax charge for the year 994 575
- Adjustments in respect of prior years (170) (337)
- Foreign tax 1,362 1,652
Total current income tax 2,186 1,890
Deferred tax
- Origination and reversal of temporary differences (355) (413)
- Adjustments in respect of prior years (403) 137
- Changes in tax rates 284 -
Total deferred tax (474) (276)
Total income tax expense 1,712 1,614
The expected corporation tax charge for the year is calculated at the UK
corporation tax rate of 25% (2023: 23.5%) 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 2024 2023
income statement as follows:
Analysis of charge in year
£'000 £'000
Reconciliation of total tax charge:
Profit before taxation 8,078 7,409
Profit before taxation multiplied by the rate of corporation tax in the UK of 2,020 1,741
25% (2023: 23.5%)
Effects of:
Adjustments in respect of prior years (573) (200)
Non-deductible income (64) (27)
Differences in tax rates in overseas jurisdictions 47 100
Unrecognised for deferred tax (2) -
Impact of rate change on deferred tax 284 -
Total income tax expense 1,712 1,614
Factors that may affect future tax charges
As a Group with worldwide operations, The Pebble Group plc is subject to
several factors that may affect future tax charges, principally the levels and
mix of profitability in different jurisdictions, transfer pricing regulations,
tax rates imposed and tax regime reforms.
On 11 July 2023, Finance (No.2) Act 2023 was enacted in the UK, introducing a
global minimum effective tax rate of 15%. The legislation implements a
domestic top-up tax and a multinational top-up tax, effective for accounting
periods starting on or after 31 December 2023. The Pebble Group plc is
continuing to monitor potential impacts as further guidance is published by
the OECD and territories implement legislation to enact the rules. Management
has performed an assessment of the impact of the UK's Pillar 2 rules and no
Pillar 2 Income Taxes are expected to arise in the jurisdictions in which the
Group operates.
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 to
equity:
2024 2023
£'000 £'000
Deferred tax: charge relating to employee share schemes
-
value of employee services - 23
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. The difference between the opening number of Ordinary
Shares as at 1 January 2024 and the weighted average number of Ordinary Shares
in issue during the year is due to shares repurchased under the Group's share
buyback programme, as detailed in note 12.
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
13, 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
29 March 2022, 28 March 2023 and 26 March 2024 and the SAYE on 25 April 2023
and 11 October 2024 is: 0.01p (2023: 0.01p) in respect of statutory earnings
per share; and 0.01p (2023: 0.01p) in respect of adjusted earnings per share.
Statutory EPS
2024 2023
Earnings (£'000)
Earnings for the purposes of basic and diluted earnings per share being 6,366 5,795
profit for the year attributable to equity shareholders
Number of shares
Weighted average number of shares for the purposes of basic earnings per share 166,216,248 167,412,949
Weighted average dilutive effects of conditional share awards 441,975 445,904
Weighted average number of shares for the purposes of diluted earnings per 166,658,223 167,858,853
share
Earnings per Ordinary Share (pence)
Basic earnings per Ordinary Share 3.83 3.46
Diluted earnings per Ordinary Share 3.82 3.45
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 note 7.
Adjusted earnings per share figures are given to exclude the effects of
amortisation of acquired intangible assets and share-based payment
(credit)/charge, all net of taxation, and are considered to show the
underlying performance of the Group.
2024 2023
Earnings (£'000)
Earnings for the purposes of basic and diluted adjusted earnings per share 7,693 7,708
being adjusted earnings (note 7)
Number of shares
Weighted average number of shares for the purposes of basic adjusted earnings 166,216,248 167,412,949
per share
Weighted average dilutive effects of conditional share awards 441,975 445,904
Weighted average number of shares for the purposes of diluted adjusted 166,658,223 167,858,853
earnings per share
Adjusted earnings per Ordinary Share (pence)
Basic adjusted earnings per Ordinary Share 4.63 4.60
Diluted adjusted earnings per Ordinary Share 4.62 4.59
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 EBITDA:
2024 2023
£'000 £'000
Operating profit 8,623 7,998
Add back/(deduct):
Depreciation 2,206 2,248
Amortisation 6,316 5,184
Share-based payment (credit)/charge (458) 548
Adjusted EBITDA 16,687 15,978
Adjusted operating profit:
2024 2023
£'000 £'000
Operating profit 8,623 7,998
Add back/(deduct):
Amortisation charge on acquired intangible assets (note 9) 2,113 1,901
Share-based payment (credit)/charge (458) 548
Adjusted operating profit 10,278 10,447
Adjusted profit before tax:
2024 2023
£'000 £'000
Profit before tax 8,078 7,409
Add back/(deduct):
Amortisation charge on acquired intangible assets (note 9) 2,113 1,901
Share-based payment (credit)/charge (458) 548
Adjusted profit before tax 9,733 9,858
Adjusted earnings:
2024 2023
£'000 £'000
Profit for the year attributable to equity shareholders 6,366 5,795
Add back/(deduct):
Amortisation charge on acquired intangible assets (note 9) 2,113 1,901
Share-based payment (credit)/charge (458) 548
Tax effect of the above (328) (536)
Adjusted earnings 7,693 7,708
8. DIVIDENDS PAID AND PROPOSED
2024 2023
£'000 £'000
Declared and paid during the year
Final dividend of 1.2p (2023: 0.6p) per share proposed and paid during the 2,005 1,005
year relating to the previous year's results
Proposed for approval at AGM (not recognised as a liability at 31 December)
Final dividend for 2024 of 1.85p (2023: 1.2p) per share 3,000 2,005
As per the Trust Deed, the EBT has waived its entitlement to a dividend on the
shares held by the trust.
9. INTANGIBLE ASSETS
Goodwill Customer relationships Software and development costs Work in progress Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 36,139 11,322 24,877 4,085 76,423
Exchange differences (175) (554) (672) (195) (1,596)
Additions - - 661 6,987 7,648
Disposals - - (186) - (186)
Transfers - - 4,200 (4,200) -
At 31 December 2023 35,964 10,768 28,880 6,677 82,289
Exchange differences 51 164 (130) 81 166
Additions - - 479 6,080 6,559
Disposals - - (22) - (22)
Transfers - - 5,578 (5,578) -
At 31 December 2024 36,015 10,932 34,785 7,260 88,992
Accumulated amortisation
At 1 January 2023 - 2,372 14,049 - 16,421
Exchange differences - (123) (345) - (468)
Charge for the year - 550 4,634 - 5,184
Disposals - - (155) - (155)
At 31 December 2023 - 2,799 18,183 - 20,982
Exchange differences - 50 (92) - (42)
Charge for the year - 537 5,779 - 6,316
Disposals - - (22) - (22)
At 31 December 2024 - 3,386 23,848 - 27,234
Net book value
At 31 December 2022 36,139 8,950 10,828 4,085 60,002
At 31 December 2023 35,964 7,969 10,697 6,677 61,307
At 31 December 2024 36,015 7,546 10,937 7,260 61,758
All additions were paid for in the year.
Staff costs of £5,367,000 (2023: £6,626,000) have been capitalised as
intangible assets. The net book value of internally generated assets is
£16,797,000 (2023: £13,785,000), which relates to all of the work in
progress balance and the remaining amount is within software and development
costs.
Individually material intangible assets held by the Group as at 31 December
2024 relate to the Facilisgroup technology platform with a net book value of
£6,425,000 (2023: £7,031,000) included within software and development costs
which had a remaining amortisation period of between 1 and 3 years (2023: 1
and 3 years) and £7,062,000 (2023: £5,820,000) included within work in
progress.
The amortisation charge for the year ended 31 December 2024 includes
£2,113,000 (2023: £1,901,000) in respect of acquired intangible assets.
This includes a charge of £950,000 (2023: £494,000) which has been
accelerated to align the useful lives of certain acquired intangible assets
with those that are internally generated.
The remaining amortisation periods for customer relationships are between 12
and 14 years (2023: 13 and 15 years) and for software and development costs
are between 1 and 5 years (2023: 1 and 5 years).
The Group tests goodwill annually for impairment or more frequently if there
are indicators that goodwill might be impaired.
Goodwill is attributed to the respective cash-generating units (CGUs) within
the Group (Brand Addition and Facilisgroup). The recoverable amounts of the
assets within the CGUs is determined using value in use calculations. In
assessing the value in use the estimated future cash flows of the CGU are
discounted to their present value using a pre-tax discount rate. Cash flows
are based upon budgeted cash flows covering a five-year period.
The key assumptions for value in use calculations are those regarding discount
rate, growth rates and expected changes to revenues and costs in the period,
as follows:
Brand Addition
· 2025 forecast with growth rates applied to revenue of 6% each
year
· EBITDA margin of 10% (2023: 10%) was applied to all years
· Pre-tax market weighted average cost of capital (WACC) of 13.5%
(2023: 12.6%)
Facilisgroup
· 2025 forecast with growth rates applied to revenue of 9% for 2026
and 11% for 2027 to 2029
· EBITDA margin of 50% (2023: 50-55%) was applied to all years
· Pre-tax market weighted average cost of capital (WACC) of 15.7%
(2023: 13.9%)
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.
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:
2024 2023
£'000 £'000
Brand Addition 33,057 33,057
Facilisgroup 2,958 2,907
36,015 35,964
The value in use, calculated as described above and attributable to each CGU,
under both the base and sensitised cases are detailed below.
2024 2023
Base case Decrease in revenue growth and margin Increase in WACC Base case
£'000 £'000 £'000 £'000
Brand Addition 80,359 62,463 66,805 102,824
Facilisgroup 51,624 34,205 42,704 98,560
131,983 96,668 109,509 201,384
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 rates and phasing for Facilisgroup's new products and an increase in
the WACC for both CGUs.
10. PROPERTY, PLANT AND EQUIPMENT
Fixtures and fittings Computer hardware Right-of-use assets Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2023 3,555 2,671 13,798 20,024
Exchange differences (118) (74) (394) (586)
Additions 245 626 516 1,387
Disposals - (350) (477) (827)
At 31 December 2023 3,682 2,873 13,443 19,998
Exchange differences 14 (22) (46) (54)
Additions 65 138 859 1,062
Disposals (1) (103) (560) (664)
At 31 December 2024 3,760 2,886 13,696 20,342
Accumulated depreciation
At 1 January 2023 2,640 1,572 6,320 10,532
Exchange differences (81) (48) (143) (272)
Charge for the year 278 465 1,505 2,248
Disposals - (345) (471) (816)
At 31 December 2023 2,837 1,644 7,211 11,692
Exchange differences 16 (15) (16) (15)
Charge for the year 259 462 1,485 2,206
Disposals (1) (103) (560) (664)
At 31 December 2024 3,111 1,988 8,120 13,219
Net book value
At 31 December 2022 915 1,099 7,478 9,492
At 31 December 2023 845 1,229 6,232 8,306
At 31 December 2024 649 898 5,576 7,123
All additions (excluding right-of-use assets) were paid in the year.
Right-of-use assets - net book value 2024 2023
£'000 £'000
Leasehold property 5,112 5,943
Fixtures and fittings 393 100
Computer hardware 71 189
Total right-of-use assets - net book value 5,576 6,232
11. LEASES
Amounts recognised in the statement of financial position
The statement of financial position shows the following amounts relating to
leases:
Right-of-use assets
£'000
At 1 January 2023 7,478
Exchange differences (251)
New leases recognised in the year 516
Disposals (6)
Depreciation charge for the year (1,505)
At 31 December 2023 6,232
Exchange differences (30)
New leases recognised in the year 859
Depreciation charge for the year (1,485)
At 31 December 2024 5,576
These are included within property, plant and equipment in the statement of
financial position.
Lease liability 2024 2023
£'000 £'000
Not more than one year
Minimum lease payments 1,998 1,807
Interest element (346) (313)
Present value of minimum lease payments 1,652 1,494
Between one and five years
Minimum lease payments 5,046 5,621
Interest element (340) (563)
Present value of minimum lease payments 4,706 5,058
More than five years
Minimum lease payments 504 1,104
Interest element (25) (32)
Present value of minimum lease payments 479 1,072
Current 1,652 1,494
Non-current 5,185 6,130
Total present value of minimum lease payments 6,837 7,624
Amounts recognised in the income statement
The income statement shows the following amounts relating to leases:
2024 2023
£'000 £'000
Depreciation charge - leasehold property 1,330 1,365
Depreciation charge - fixtures and fittings 129 86
Depreciation charge - computer hardware 26 54
1,485 1,505
Interest expense (within finance expense) 357 399
The above leases relate to office space, computer equipment and motor
vehicles. The net book value by category is set out in note 10.
12. SHARE CAPITAL
The authorised, issued and fully paid number of shares are set out below.
Ordinary Share Share
capital
premium
Shares
Number £ £
Ordinary Shares of 1p each:
At 1 January 2023 and 31 December 2023 167,450,893 1,674,509 78,451,312
Purchase of own shares (2,674,539) (26,745) -
At 31 December 2024 164,776,354 1,647,764 78,451,312
The Ordinary Shares have full voting, dividend and capital distribution
rights, including on winding up. They are non-redeemable.
In May 2024, the Group commenced a share buyback programme to repurchase up to
£5 million of its own shares. During the year, 2,674,539 Ordinary Shares with
a total nominal value of £26,745 were bought back by the Company for a total
consideration, including transaction costs, of £1,415,570, charged to
retained earnings. The Company subsequently cancelled these shares which
resulted in a reduction in share capital of £26,745, with a corresponding
increase in the capital reserve. Details of the individual transactions can be
found in the RNS announcements section of the Company's website.
During the year, the EBT purchased a total of 194,085 Ordinary Shares at an
average price of £0.56 per share, which were used to satisfy the exercise of
153,535 LTIP options. The EBT did not sell any shares and the remaining
453,187 shares are held by the Trust.
13. SHARE-BASED PAYMENTS
In the year ended 31 December 2024, the Group operated equity-settled
share-based payment plans.
During the year, the Group recognised a total credit of £458,000 (2023:
charge of £548,000) in respect of share-based payment transactions. The
credit in the current year arose due to the reversal of costs previously
charged relating to the non-market performance conditions of the options
granted under the 2022 and 2023 Long Term Incentive Plans offset in part by
expenses recognised for the 2024 plan. The difference between the above and
the amount recognised in the share-based payment reserve is due to options
exercised during the year, cash-settled options and associated social security
costs.
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